Essar Oil Debt surged on 28.9% in 2015 while EBITDA decreased on 6.3%
25-05-2015 • About Essar Oil (
$ESSAROIL) • By InTwits
Essar Oil reported FY2015 financial results today. Overall the company's long term financial model is characterised by the following facts:
- EBITDA Margin is relatively stable: 5.7% in FY2015 vs. 5.1% in FY2014 vs. 5.3% in FY2011
- Essar Oil has low CAPEX intensity: 5 year average CAPEX/Revenue was 3.8%. At the same time it's a lot of higher than industry average of 6.7%.
- CAPEX is quite volatile: 7,697 in FY2015, 13,680 in FY2014, 22,167 in FY2013, 27,920 in FY2012, 43,741 in FY2011
- The company has highly profitable business model: ROIC is at 14.2%
- It operates with high leverage: Net Debt/EBITDA is 5.7x while industry average is 3.9x
Below you can find a comprehensive analysis of the key data driving the company's performance and stock price.
Essar Oil ($ESSAROIL) key annual financial indicators
| mln. INR | 2011 | 2012 | 2013 | 2014 | 2015 | 2015/2014 |
|---|
P&L
|
|---|
| Revenue | 470,609 | 583,366 | 885,781 | 986,019 | 829,825 | -15.8% |
| EBITDA | 25,130 | 23,275 | 36,937 | 50,580 | 47,373 | -6.3% |
| Net Income | -2,517 | -12,855 | -11,804 | 1,270 | 15,266 | 1,101.9% |
Balance Sheet
|
|---|
| Cash | 15,361 | 5,056 | 3,410 | 12,786 | 3,287 | -74.3% |
| Short Term Debt | 29,775 | 55,081 | 101,957 | 67,570 | 118,858 | 75.9% |
| Long Term Debt | 116,183 | 122,028 | 145,387 | 142,846 | 152,408 | 6.7% |
Cash flow
|
|---|
| Capex | 43,741 | 27,920 | 22,167 | 13,680 | 7,697 | -43.7% |
Ratios
|
|---|
| Revenue growth | 28.9% | 24.0% | 51.8% | 11.3% | -15.8% | |
| EBITDA growth | 124.8% | -7.4% | 58.7% | 36.9% | -6.3% | |
| EBITDA Margin | 5.3% | 4.0% | 4.2% | 5.1% | 5.7% | 0.6% |
| Net Income Margin | -0.5% | -2.2% | -1.3% | 0.1% | 1.8% | 1.7% |
| CAPEX, % of revenue | 9.3% | 4.8% | 2.5% | 1.4% | 0.9% | -0.5% |
| ROIC | 10.1% | 7.8% | 9.9% | 14.6% | 14.2% | -0.4% |
| ROE | -5.8% | -36.5% | -39.6% | 5.2% | 38.7% | 33.6% |
| Net Debt/EBITDA | 5.2x | 7.4x | 6.6x | 3.9x | 5.7x | 1.7x |
Revenue and profitability
The company's Revenue dropped on 15.8% in FY2015. Revenue decline happened at the same time with EBITDA margin expansion. EBITDA Margin increased slightly on 0.58 pp from 5.1% to 5.7% in FY2015.
Net Income marign increased slightly on 1.7 pp from 0.13% to 1.8% in FY2015.
Capital expenditures (CAPEX) and working capital investments
Essar Oil's CAPEX/Revenue was 0.93% in FY2015. CAPEX/Revenue decreased on 3.9 pp from 4.8% in FY2012 to 0.93% in FY2015. For the last three years the average CAPEX/Revenue was 1.6%.
Return on investment
The company operates at high and attractive ROE (38.74%) while ROIC is a bit lower (14.20%). ROIC showed almost no change in FY2015. ROE surged on 33.6 pp from 5.2% to 38.7% in FY2015.
Leverage (Debt)
Debt level is 5.7x Net Debt / EBITDA and 5.7x Debt / EBITDA. Net Debt / EBITDA jumped on 1.7x from 3.9x to 5.7x in FY2015. Debt jumped on 28.9% in FY2015 while cash dropped on 74.3% in FY2015.
Management team
Essar Oil's CEO Lalit Kumar Gupta has spent 6 years at the company.
Appendix 1: Peers in Integrated Oil & Gas
Below we provide Essar Oil benchmarking against other companies in Integrated Oil & Gas industry for the last 5 years. We show data for the top-5 companies by key financial metric together with the median value for all the companies in the industry.
Top companies by Revenue growth, %
| Top | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Deep Industries ($DEEPIND) | | 22.5% | 8.0% | 39.1% | 11.5% |
| Reliance Industries ($RELIANCE) | | 34.9% | 10.8% | 9.4% | -13.6% |
| |
|---|
| Median (2 companies) | | 28.7% | 9.4% | 24.2% | -1.0% |
|---|
| Essar Oil ($ESSAROIL) | | 24.0% | 51.8% | 11.3% | -15.8% |
Top companies by EBITDA margin, %
| Top | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Deep Industries ($DEEPIND) | 52.6% | 47.6% | 55.5% | 57.8% | 54.5% |
| Reliance Industries ($RELIANCE) | 14.2% | 9.7% | 8.3% | 8.1% | 10.0% |
| |
|---|
| Median (2 companies) | 33.4% | 28.7% | 31.9% | 32.9% | 32.2% |
|---|
| Essar Oil ($ESSAROIL) | 5.3% | 4.0% | 4.2% | 5.1% | 5.7% |
Top companies by CAPEX/Revenue, %
| Top | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Deep Industries ($DEEPIND) | 46.1% | 164.0% | 27.8% | 66.1% | 36.1% |
| Reliance Industries ($RELIANCE) | 12.7% | 4.6% | 7.7% | 13.8% | 16.9% |
| |
|---|
| Median (2 companies) | 29.4% | 84.3% | 17.8% | 40.0% | 26.5% |
|---|
| Essar Oil ($ESSAROIL) | 9.3% | 4.8% | 2.5% | 1.4% | 0.9% |
Top companies by ROIC, %
| Top | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Deep Industries ($DEEPIND) | 11.6% | 9.6% | 9.5% | 13.1% | 12.3% |
| Reliance Industries ($RELIANCE) | 10.1% | 8.5% | 7.6% | 7.3% | 7.0% |
| |
|---|
| Median (2 companies) | 10.8% | 9.1% | 8.5% | 10.2% | 9.7% |
|---|
| Essar Oil ($ESSAROIL) | 10.1% | 7.8% | 9.9% | 14.6% | 14.2% |
Top companies by Net Debt / EBITDA
| Top | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Reliance Industries ($RELIANCE) | 1.8x | 1.7x | 2.1x | 2.9x | 3.9x |
| Deep Industries ($DEEPIND) | 1.5x | 3.5x | 2.4x | 2.1x | 2.1x |
| |
|---|
| Median (2 companies) | 1.7x | 2.6x | 2.3x | 2.5x | 3.0x |
|---|
| Essar Oil ($ESSAROIL) | 5.2x | 7.4x | 6.6x | 3.9x | 5.7x |
