Prakash Industries Net Income dropped on 94.6% in 2015 and EBITDA Margin dropped on 12.3 pp from 14.5% to 2.2%
25-05-2015 • About Prakash Industries (
$PRAKASH) • By InTwits
Prakash Industries reported FY2015 financial results today. Overall the company's long term financial model is characterised by the following facts:
- Prakash Industries doesn't have a profitable business model yet: FY2015 ROIC is -1.1%
- EBITDA Margin is quite volatile: 2.2% in FY2015, 14.5% in FY2014, 13.0% in FY2013, 17.8% in FY2012, 20.7% in FY2011
- Prakash Industries has high CAPEX intensity: 5 year average CAPEX/Revenue was 16.2%. At the same time it's a lot of higher than industry average of 12.8%.
- CAPEX is quite volatile: 1,806 in FY2015, 2,147 in FY2014, 1,596 in FY2013, 4,734 in FY2012, 6,241 in FY2011
- The company has unprofitable business model: ROIC is at -1.1%
- It operates with high leverage: Net Debt/EBITDA is 11.9x while industry average is 8.1x
Below you can find a comprehensive analysis of the key data driving the company's performance and stock price.
Prakash Industries ($PRAKASH) key annual financial indicators
| mln. INR | 2011 | 2012 | 2013 | 2014 | 2015 | 2015/2014 |
|---|
P&L
|
|---|
| Revenue | 16,641 | 21,069 | 25,109 | 25,966 | 28,364 | 9.2% |
| EBITDA | 3,446 | 3,753 | 3,262 | 3,757 | 621 | -83.5% |
| Net Income | 2,671 | 2,682 | 1,649 | 1,732 | 93 | -94.6% |
Balance Sheet
|
|---|
| Cash | 469 | 392 | 67 | 96 | 197 | 105.4% |
| Short Term Debt | 758 | 1,067 | 1,442 | 2,629 | 1,301 | -50.5% |
| Long Term Debt | 6,008 | 8,622 | 7,885 | 7,023 | 6,303 | -10.3% |
Cash flow
|
|---|
| Capex | 6,241 | 4,734 | 1,596 | 2,147 | 1,806 | -15.9% |
Ratios
|
|---|
| Revenue growth | -48.3% | 26.6% | 19.2% | 3.4% | 9.2% | |
| EBITDA growth | -8.9% | 8.9% | -13.1% | 15.2% | -83.5% | |
| EBITDA Margin | 20.7% | 17.8% | 13.0% | 14.5% | 2.2% | -12.3% |
| Net Income Margin | 16.0% | 12.7% | 6.6% | 6.7% | 0.3% | -6.3% |
| CAPEX, % of revenue | 37.5% | 22.5% | 6.4% | 8.3% | 6.4% | -1.9% |
| ROIC | 13.0% | 10.7% | 7.2% | 8.0% | -1.1% | -9.2% |
| ROE | 17.0% | 14.6% | 8.1% | 8.0% | 0.4% | -7.6% |
| Net Debt/EBITDA | 1.8x | 2.5x | 2.8x | 2.5x | 11.9x | 9.4x |
Revenue and profitability
The company's Revenue increased on 9.2% in FY2015. Revenue growth was financed by EBITDA margin decline. EBITDA Margin dropped on 12.3 pp from 14.5% to 2.2% in FY2015.
Net Income marign decreased on 6.3 pp from 6.7% to 0.33% in FY2015.
Capital expenditures (CAPEX) and working capital investments
In FY2015 Prakash Industries had CAPEX/Revenue of 6.4%. The company's CAPEX/Revenue dropped on 16.1 pp from 22.5% in FY2012 to 6.4% in FY2015. For the last three years the average CAPEX/Revenue was 7.0%.Prakash Industries maintained rich investment policy and has spent a lot to CAPEX (291% of EBITDA).
Return on investment
The company operates at negative ROIC (-1.15%) and low but positive ROE (0.42%). ROIC decreased on 9.2 pp from 8.0% to -1.1% in FY2015. ROE decreased on 7.6 pp from 8.0% to 0.42% in FY2015.
Leverage (Debt)
Company's Net Debt / EBITDA is 11.9x and Debt / EBITDA is 12.2x. Net Debt / EBITDA surged on 9.4x from 2.5x to 11.9x in FY2015. Debt dropped on 21.2% in FY2015 while cash jumped on 105% in FY2015.
Valuation
The company's trades at EV/EBITDA 19.9x and P/E 52.7x while industy averages are 10.5x and 26.1x.
Management team
The company's CEO is M L Pareek. M L Pareek has 3 years tenure at the company. The company's CFO is P L Gupta. P L Gupta has 3 years tenure at the company.
Appendix 1: Peers in Iron & Steel/Interm.Products
Below you can find Prakash Industries benchmarking vs. other companies in Iron & Steel/Interm.Products industry. It's shown for the period of 5 years for the key financial metrics. Each table has median value for all the companies in the industry together with individual financial data of the top-5 companies in the industry by particular financial metric.
Top companies by Revenue growth, %
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Inducto Steel ($INDCTST) | | | 54.5% | 150.2% | |
| Kamdhenu Ispat ($KIL) | -65.5% | 25.7% | 13.7% | 68.3% | |
| Metkore Alloys & Industries ($METKORE) | -49.1% | 43.7% | -10.9% | 53.4% | |
| Tata Metaliks ($TATAMETALI) | | -7.0% | -19.0% | 44.6% | -1.3% |
| Visa Steel ($VISASTEEL) | -12.5% | 3.3% | -24.1% | 42.0% | |
| |
|---|
| Median (31 companies) | -34.1% | 11.9% | 3.2% | 2.8% | 7.0% |
|---|
| Prakash Industries ($PRAKASH) | | 26.6% | 19.2% | 3.4% | 9.2% |
Top companies by EBITDA margin, %
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Jindal Steel & Power ($JINDALSTEL) | 48.3% | 37.5% | 30.5% | 28.1% | |
| Bhushan Steel ($BHUSANSTL) | 29.0% | 31.2% | 32.3% | 28.1% | |
| Sarda Energy & Minerals ($SARDAEN) | 15.2% | 16.3% | 21.5% | 21.3% | 21.5% |
| Jsw Steel ($JSWSTEEL) | 20.2% | 17.8% | 17.1% | 17.9% | 17.7% |
| Jai Corp ($JAICORPLTD) | 18.4% | 14.1% | 16.3% | 16.0% | 12.7% |
| |
|---|
| Median (28 companies) | 13.0% | 9.4% | 9.0% | 7.0% | 10.9% |
|---|
| Prakash Industries ($PRAKASH) | 20.7% | 17.8% | 13.0% | 14.5% | 2.2% |
Top companies by CAPEX/Revenue, %
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Jindal Steel & Power ($JINDALSTEL) | 64.7% | 34.2% | 47.6% | 69.6% | |
| Bhushan Steel ($BHUSANSTL) | 81.1% | 47.2% | 44.0% | 50.4% | |
| Jayaswal Neco Industries ($JAYNECOIND) | 27.9% | 20.4% | 44.0% | 31.1% | |
| Surana Industries ($SURANAIND) | | 41.3% | 54.8% | 21.5% | |
| Steel Authority Of India ($SAIL) | 25.3% | 20.9% | 20.7% | 19.3% | |
| |
|---|
| Median (20 companies) | 11.9% | 7.5% | 11.6% | 6.6% | 4.8% |
|---|
| Prakash Industries ($PRAKASH) | 37.5% | 22.5% | 6.4% | 8.3% | 6.4% |
Top companies by ROIC, %
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Tata Metaliks ($TATAMETALI) | 3.1% | -23.5% | -3.7% | 19.9% | 57.4% |
| Nova Iron & Steel ($NOVIS) | | | | 15.4% | |
| Kirloskar Ferrous Industries ($KIRLFER) | 20.0% | 19.1% | 16.8% | 12.4% | 14.7% |
| Pennar Industries ($PENIND) | 31.6% | 26.8% | 18.4% | 12.3% | 15.7% |
| Jsw Steel ($JSWSTEEL) | 9.7% | 11.0% | 10.3% | 12.1% | 9.9% |
| |
|---|
| Median (40 companies) | 9.4% | 6.8% | 5.5% | 5.5% | 9.8% |
|---|
| Prakash Industries ($PRAKASH) | 13.0% | 10.7% | 7.2% | 8.0% | -1.1% |
Top companies by Net Debt / EBITDA
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Jai Balaji Industries ($JAIBALAJI) | 5.5x | | | 89.7x | |
| Visa Steel ($VISASTEEL) | 6.9x | 20.1x | | 24.4x | |
| Ismt ($ISMTLTD) | 4.4x | 5.3x | 9.8x | 19.9x | |
| Kic Metaliks ($KAJARIR) | 6.6x | 9.2x | 3.0x | 18.2x | |
| Bhushan Steel ($BHUSANSTL) | 8.1x | 6.3x | 8.6x | 12.9x | |
| |
|---|
| Median (29 companies) | 3.8x | 4.6x | 4.4x | 3.4x | 1.6x |
|---|
| Prakash Industries ($PRAKASH) | 1.8x | 2.5x | 2.8x | 2.5x | 11.9x |
