Simplex Infrastructures reports 26.4% EBITDA growth and 10.5% Revenue growth

26-05-2015 • About Simplex Infrastructures ($SIMPLEXINF) • By InTwits

Simplex Infrastructures reported FY2015 financial results today. Overall the company's long term financial model is characterised by the following facts:

EBITDA Margin is expanding: 10.8% in FY2015 vs. 9.5% in FY2014 vs. 8.7% in FY2011
Simplex Infrastructures has low CAPEX intensity: 5 year average CAPEX/Revenue was 3.1%. At the same time it's in pair with industry average of 38.6%.
CAPEX is quite volatile: 1,633 in FY2015, 1,523 in FY2014, 730 in FY2013, 2,344 in FY2012, 2,393 in FY2011
The company has business model with average profitability: ROIC is at 10.7%
It operates with medium-size leverage: Net Debt/EBITDA is 5.0x while industry average is 5.3x

Below you can find a comprehensive analysis of the key data driving the company's performance and stock price.

Simplex Infrastructures ($SIMPLEXINF) key annual financial indicators

mln. INR	2011	2012	2013	2014	2015	2015/2014
P&L
Revenue	48,238	60,098	58,975	56,154	62,024	10.5%
EBITDA	4,202	4,631	4,722	5,323	6,728	26.4%
Net Income	1,246	836	533	585	573	-2.0%
Balance Sheet
Cash	828	646	754	336	328	-2.4%
Short Term Debt	16,143	20,438	24,009	25,536	28,276	10.7%
Long Term Debt	419	879	2,768	3,770	5,412	43.6%
Cash flow
Capex	2,393	2,344	730	1,523	1,633	7.3%
Ratios
Revenue growth	-37.0%	24.6%	-1.9%	-4.8%	10.5%
EBITDA growth	-21.3%	10.2%	2.0%	12.7%	26.4%
EBITDA Margin	8.7%	7.7%	8.0%	9.5%	10.8%	1.4%
Net Income Margin	2.6%	1.4%	0.9%	1.0%	0.9%	-0.1%
CAPEX, % of revenue	5.0%	3.9%	1.2%	2.7%	2.6%	-0.1%
ROIC	12.3%	10.7%	8.7%	8.9%	10.7%	1.8%
ROE	12.1%	7.3%	4.2%	4.3%	3.9%	-0.3%
Net Debt/EBITDA	3.7x	4.5x	5.5x	5.4x	5.0x	-0.5x

Revenue and profitability

Simplex Infrastructures's Revenue surged on 10.5% in FY2015. Despite revenue decline the EBITDA margin expanded. EBITDA Margin increased on 4.2 pp from 28.9% to 33.1% in FY2015.

Net Income marign showed almost no change in FY2015.

Capital expenditures (CAPEX) and working capital investments

Simplex Infrastructures's CAPEX/Revenue was 2.6% in FY2015. Simplex Infrastructures showed small CAPEX/Revenue decline of 1.3 pp from 3.9% in FY2012 to 2.6% in FY2015. It's average CAPEX/Revenue for the last three years was 2.2%.

Return on investment

The company operates at low ROIC (10.75%) and ROE (3.93%). ROIC increased slightly on 1.8 pp from 8.9% to 10.7% in FY2015. ROE showed almost no change in FY2015.

Leverage (Debt)

Company's Net Debt / EBITDA is 5.0x and Debt / EBITDA is 5.0x. Net Debt / EBITDA dropped on 0.5x from 5.4x to 5.0x in FY2015. Debt jumped on 15.0% in FY2015 while cash decreased on 2.4% in FY2015.

Valuation

The company's trades at EV/EBITDA 7.9x and P/E 34.9x while industy averages are 10.5x and 26.1x. The company's EV/(EBITDA-CAPEX) is 10.5x with the industry average at 4.7x.

Appendix 1: Peers in Construction & Engineering

Below we provide Simplex Infrastructures benchmarking against other companies in Construction & Engineering 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
Madhucon Projects ($MADHUCON)	-72.3%	-19.5%	61.7%	81.2%
C & C Constructions ($CANDC)	7.1%	-11.6%	-12.2%	31.7%
Mbl Infrastructures ($MBLINFRA)		26.3%	7.1%	30.3%	11.1%
Atlanta ($ATLANTA)		-47.6%	115.1%	28.1%	50.2%
Arss Infrastructure Projects ($ARSSINFRA)		-5.3%	-34.8%	17.8%	-27.8%
Median (31 companies)	-9.9%	8.7%	6.9%	7.1%	9.4%
Simplex Infrastructures ($SIMPLEXINF)		24.6%	-1.9%	-4.8%	10.5%

Top companies by EBITDA margin, %


Top 5	FY2011	FY2012	FY2013	FY2014	FY2015
Jaiprakash Associates ($JPASSOCIAT)	44.0%	36.9%	35.9%	32.4%
Atlanta ($ATLANTA)	44.1%	28.5%	34.6%	30.8%	21.4%
Shristi Infrastructure Development Corporation ($SHRISTI)	28.0%	27.2%	30.0%	30.0%
Madhucon Projects ($MADHUCON)	11.6%	8.4%	31.9%	22.1%
Arss Infrastructure Projects ($ARSSINFRA)	21.8%	14.0%	13.9%	22.0%	31.3%
Median (29 companies)	12.4%	12.4%	11.3%	10.7%	12.1%
Simplex Infrastructures ($SIMPLEXINF)	8.7%	7.7%	8.0%	9.5%	10.8%

Top companies by CAPEX/Revenue, %


Top 5	FY2011	FY2012	FY2013	FY2014	FY2015
Madhucon Projects ($MADHUCON)	149.8%	234.5%	155.1%	76.0%
Jaiprakash Associates ($JPASSOCIAT)	114.7%	97.0%	65.5%	45.0%
Supreme Infrastructure India ($SUPREMEINF)	16.7%	46.6%	31.1%	43.1%
Man Infraconstruction ($MANINFRA)	11.5%	7.8%	1.6%	25.0%
Jmc Projects (India) ($JMCPROJECT)	7.8%	4.5%	1.7%	18.9%
Median (23 companies)	6.1%	7.7%	8.6%	6.6%	2.5%
Simplex Infrastructures ($SIMPLEXINF)	5.0%	3.9%	1.2%	2.7%	2.6%

Top companies by ROIC, %


Top 5	FY2011	FY2012	FY2013	FY2014	FY2015
Skipper ($SKIPPER)	10.6%	10.4%	13.5%	14.7%	27.4%
Mbl Infrastructures ($MBLINFRA)	24.3%	21.3%	13.4%	14.0%	13.6%
Voltas ($VOLTAS)	32.9%	19.6%	11.7%	11.8%	19.3%
Supreme Infrastructure India ($SUPREMEINF)	15.0%	15.4%	12.4%	10.6%
Reliance Industrial Infrastructure ($RIIL)	5.1%	10.8%	12.7%	10.5%	5.7%
Median (42 companies)	10.5%	8.6%	7.1%	5.6%	7.4%
Simplex Infrastructures ($SIMPLEXINF)	12.3%	10.7%	8.7%	8.9%	10.7%

Top companies by Net Debt / EBITDA


Top 5	FY2011	FY2012	FY2013	FY2014	FY2015
Coromandel Engineering Company ($COROENGG)	7.1x		14.4x	54.6x	3.2x
Welspun Projects ($WELPROJ)	71.3x	6.0x	2.6x	20.8x
Punj Lloyd ($PUNJLLOYD)	6.5x	6.7x	6.8x	16.5x
Madhucon Projects ($MADHUCON)	40.1x	96.8x	19.0x	16.4x
Hindustan Construction Co ($HCC)	10.0x	18.8x	20.3x	12.3x	9.3x
Median (32 companies)	3.7x	4.7x	5.5x	6.6x	3.1x
Simplex Infrastructures ($SIMPLEXINF)	3.7x	4.5x	5.5x	5.4x	5.0x

Simplex Infrastructures stock price chart

Simplex Infrastructures financials

mln.	FY2010	FY2011	FY2012

Revenue	76,602	48,238	60,098
EBITDA	5,336	4,202	4,631
Net income	1,271	1,246	836.4
CAPEX	1,210	2,393	2,344
Debt	13,012	16,561	21,317
Cash	938.6	827.5	646.3

About Simplex Infrastructures

Simplex Infrastructures Limited is engaged in the infrastructure construction activities in India and internationally. The company is engaged in building rail infrastructure, including rail tracks, station buildings, bridges, and culverts; and design and construction of high-rise infrastructure comprising multi-storeyed residential towers, institutional/IT buildings, hotels, hospitals, and mass housing projects. It also builds industrial structures, such as steel and power plants; and undertakes greenfield and modernization projects for cement, aluminum, copper, engineering, automobiles, petrochemicals, fertilizers, paper textiles, pharmaceuticals, chemicals, and other industrial plants. In addition, the company is involved in erecting various types of power infrastructures, including thermal, hydel, and nuclear projects; underwater piling, which comprise steel piling; and building bridges across rivers. Further, it provides ground engineering services, such as pre-cast piling and jointed piling; and cast-in-situ, driven, and bored piling, as well as soil investigation, soil compaction, diaphragm walls, grouting, stone columns, etc. Additionally, the company is engaged in the renovation and modernization of airports; provision of oil drilling, wind mill, and real estate services; and the hire of plant and equipment, including oil drilling rig. Simplex Infrastructures Limited was founded in 1924 and is based in Kolkata, India.