Heritage Foods revenue surged on 20.4% in 2015 while EBITDA Margin decreased slightly on 1.6 pp from 5.6% to 4.0%
26-05-2015 • About Heritage Foods (
$HERITGFOOD) • By InTwits
Heritage Foods reported FY2015 financial results today. Overall the company's long term financial model is characterised by the following facts:
- Heritage Foods has low CAPEX intensity: 5 year average CAPEX/Revenue was 2.6%. At the same time it's in pair with industry average of 13.7%.
- CAPEX is quite volatile: 512 in FY2015, 642 in FY2014, 307 in FY2013, 293 in FY2012, 307 in FY2011
- The company has highly profitable business model: ROIC is at 13.5%
- It operates with medium-size leverage: Net Debt/EBITDA is 1.4x while industry average is 1.3x
Below you can find a comprehensive analysis of the key data driving the company's performance and stock price.
Heritage Foods ($HERITGFOOD) key annual financial indicators
| mln. INR | 2011 | 2012 | 2013 | 2014 | 2015 | 2015/2014 |
|---|
P&L
|
|---|
| Revenue | 10,961 | 13,934 | 16,018 | 17,220 | 20,730 | 20.4% |
| EBITDA | 360 | 513 | 1,024 | 956 | 820 | -14.2% |
| Net Income | 11 | 92 | 499 | 453 | 284 | -37.4% |
Balance Sheet
|
|---|
| Cash | 282 | 288 | 317 | 438 | 400 | -8.6% |
| Short Term Debt | 768 | 706 | 857 | 1,021 | 1,017 | -0.5% |
| Long Term Debt | 774 | 698 | 406 | 392 | 557 | 42.3% |
Cash flow
|
|---|
| Capex | 307 | 293 | 307 | 642 | 512 | -20.3% |
Ratios
|
|---|
| Revenue growth | -56.6% | 27.1% | 15.0% | 7.5% | 20.4% | |
| EBITDA growth | -29.6% | 42.5% | 99.7% | -6.7% | -14.2% | |
| EBITDA Margin | 3.3% | 3.7% | 6.4% | 5.6% | 4.0% | -1.6% |
| Net Income Margin | 0.1% | 0.7% | 3.1% | 2.6% | 1.4% | -1.3% |
| CAPEX, % of revenue | 2.8% | 2.1% | 1.9% | 3.7% | 2.5% | -1.3% |
| ROIC | 5.9% | 11.7% | 29.6% | 22.4% | 13.5% | -8.9% |
| ROE | 1.3% | 10.3% | 42.6% | 28.3% | 15.3% | -13.0% |
| Net Debt/EBITDA | 3.5x | 2.2x | 0.9x | 1.0x | 1.4x | 0.4x |
Revenue and profitability
The company's Revenue surged on 20.4% in FY2015. Revenue growth was financed by EBITDA margin decline. EBITDA Margin decreased slightly on 1.6 pp from 5.6% to 4.0% in FY2015.
Net Income marign decreased slightly on 1.3 pp from 2.6% to 1.4% in FY2015.
Capital expenditures (CAPEX) and working capital investments
The company's CAPEX/Revenue was 2.5% in FY2015. The company's CAPEX/Revenue showed almost no change from FY2012 to FY2015. It's average level of CAPEX/Revenue for the last three years was 2.7%.To secure this fast growth Heritage Foods invested a large share of EBITDA (62.4%) to CAPEX.
Return on investment
The company operates at good ROIC (13.46%) and ROE (15.26%). ROIC decreased on 8.9 pp from 22.4% to 13.5% in FY2015. ROE dropped on 13.0 pp from 28.3% to 15.3% in FY2015.
Leverage (Debt)
Debt level is 1.4x Net Debt / EBITDA and 1.9x Debt / EBITDA. Net Debt / EBITDA jumped on 0.4x from 1.0x to 1.4x in FY2015. Debt surged on 11.4% in FY2015 while cash decreased on 8.6% in FY2015.
Valuation
The company's trades at EV/EBITDA 11.4x and P/E 28.8x while industy averages are 10.5x and 26.1x. Heritage Foods's EV/(EBITDA-CAPEX) is 30.3x with the industry average at 4.7x.
Appendix 1: Peers in Packaged Foods
Below we provide Heritage Foods benchmarking against other companies in Packaged Foods 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 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Krbl ($KRBL) | -2.2% | 5.6% | 27.6% | 39.9% | |
| Sunil Agro Foods ($SUNILAGR) | -34.2% | 1.6% | 38.3% | 29.1% | |
| Milkfood ($MLKFOOD) | -29.8% | -1.1% | 9.3% | 27.7% | |
| Simran Farms ($SIMRAN) | -69.5% | 38.4% | 23.8% | 27.5% | |
| Venky'S (India) ($VENKYS) | -61.1% | 18.0% | 46.0% | 24.8% | |
| |
|---|
| Median (15 companies) | -35.3% | 14.7% | 14.8% | 16.0% | 13.8% |
|---|
| Heritage Foods ($HERITGFOOD) | | 27.1% | 15.0% | 7.5% | 20.4% |
Top companies by EBITDA margin, %
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Glaxosmithkline Consumer Healthcare ($GSKCONS) | 18.8% | 18.6% | 17.8% | 22.5% | 17.2% |
| Nestle India ($NESTLEIND) | 20.5% | 22.0% | 21.7% | 20.9% | |
| Krbl ($KRBL) | 14.7% | 14.1% | 14.2% | 15.1% | |
| Vadilal Industries ($VADILALIND) | 10.1% | 19.8% | 11.6% | 11.2% | |
| Britannia Industries ($BRITANNIA) | 5.2% | 5.7% | 6.9% | 9.2% | 11.1% |
| |
|---|
| Median (12 companies) | 7.7% | 8.0% | 8.7% | 8.7% | 8.8% |
|---|
| Heritage Foods ($HERITGFOOD) | 3.3% | 3.7% | 6.4% | 5.6% | 4.0% |
Top companies by CAPEX/Revenue, %
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Venky'S (India) ($VENKYS) | 6.4% | 8.9% | 6.6% | 10.4% | |
| Krbl ($KRBL) | 5.8% | 4.1% | 4.0% | 6.1% | |
| Vadilal Industries ($VADILALIND) | 20.1% | 12.2% | 9.4% | 5.9% | |
| Adf Foods ($ADFFOODS) | 21.8% | 1.9% | 18.3% | 5.8% | |
| Glaxosmithkline Consumer Healthcare ($GSKCONS) | 3.6% | 2.7% | | 4.3% | 2.5% |
| |
|---|
| Median (9 companies) | 3.6% | 4.1% | 4.2% | 4.3% | 2.5% |
|---|
| Heritage Foods ($HERITGFOOD) | 2.8% | 2.1% | 1.9% | 3.7% | 2.5% |
Top companies by ROIC, %
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Britannia Industries ($BRITANNIA) | 17.8% | 24.6% | 33.7% | 54.0% | 59.4% |
| Nestle India ($NESTLEIND) | 85.4% | 57.7% | 47.9% | 49.6% | |
| Kse ($KSE) | 14.7% | 27.7% | 14.1% | 36.9% | |
| Umang Dairies ($UMANGDAIR) | 54.8% | 93.5% | 55.6% | 22.3% | 28.4% |
| Krbl ($KRBL) | 14.4% | 11.7% | 14.5% | 18.3% | |
| |
|---|
| Median (19 companies) | 13.1% | 12.3% | 10.9% | 20.3% | 36.2% |
|---|
| Heritage Foods ($HERITGFOOD) | 5.9% | 11.7% | 29.6% | 22.4% | 13.5% |
Top companies by Net Debt / EBITDA
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Venky'S (India) ($VENKYS) | 0.9x | 2.6x | 2.8x | 6.7x | |
| Vadilal Industries ($VADILALIND) | 5.8x | 2.6x | 4.5x | 3.9x | |
| Bambino Agro Industries ($BAMBINO) | 3.1x | 3.2x | | 3.2x | |
| Krbl ($KRBL) | 3.7x | 4.1x | 2.9x | 3.0x | |
| Umang Dairies ($UMANGDAIR) | 1.8x | 0.6x | 0.5x | 1.7x | 1.1x |
| |
|---|
| Median (12 companies) | 2.2x | 1.7x | 1.1x | 0.9x | -0.0x |
|---|
| Heritage Foods ($HERITGFOOD) | 3.5x | 2.2x | 0.9x | 1.0x | 1.4x |
