Bhushan Steel reports 64.7% CAPEX decline while 10.0% Revenue growth
27-05-2015 • About Bhushan Steel (
$BHUSANSTL) • By InTwits
Bhushan Steel reported FY2015 financial results today. Overall the company's long term financial model is characterised by the following facts:
- Bhushan Steel has high CAPEX intensity: 5 year average CAPEX/Revenue was 47.8%. At the same time it's a lot of higher than industry average of 9.0%.
- CAPEX is quite volatile: 17,204 in FY2015, 48,763 in FY2014, 45,276 in FY2013, 47,037 in FY2012, 56,776 in FY2011
- The company has potentially unprofitable business model: ROIC is at 2.6%
- It operates with high leverage: Net Debt/EBITDA is 17.7x while industry average is 8.2x
Below you can find a comprehensive analysis of the key data driving the company's performance and stock price.
Bhushan Steel ($BHUSANSTL) key annual financial indicators
| mln. INR | 2011 | 2012 | 2013 | 2014 | 2015 | 2015/2014 |
|---|
P&L
|
|---|
| Revenue | 70,035 | 99,612 | 102,806 | 96,758 | 106,458 | 10.0% |
| EBITDA | 20,319 | 31,106 | 33,182 | 27,210 | 21,724 | -20.2% |
| Net Income | 10,074 | 10,148 | 9,069 | 591 | -12,568 | -2,224.9% |
Balance Sheet
|
|---|
| Cash | 382 | 3,458 | 1,142 | 552 | 881 | 59.8% |
| Short Term Debt | 67,093 | 42,878 | 68,592 | 96,580 | 76,015 | -21.3% |
| Long Term Debt | 98,518 | 155,288 | 216,642 | 255,661 | 309,277 | 21.0% |
Cash flow
|
|---|
| Capex | 56,776 | 47,037 | 45,276 | 48,763 | 17,204 | -64.7% |
Ratios
|
|---|
| Revenue growth | -49.8% | 42.2% | 3.2% | -5.9% | 10.0% | |
| EBITDA growth | 39.1% | 53.1% | 6.7% | -18.0% | -20.2% | |
| EBITDA Margin | 29.0% | 31.2% | 32.3% | 28.1% | 20.4% | -7.7% |
| Net Income Margin | 14.4% | 10.2% | 8.8% | 0.6% | -11.8% | -12.4% |
| CAPEX, % of revenue | 81.1% | 47.2% | 44.0% | 50.4% | 16.2% | -34.2% |
| ROIC | 9.0% | 9.6% | 7.3% | 4.1% | 2.6% | -1.5% |
| ROE | 20.6% | 15.1% | 10.8% | 0.5% | -15.1% | -15.6% |
| Net Debt/EBITDA | 8.1x | 6.3x | 8.6x | 12.9x | 17.7x | 4.8x |
Revenue and profitability
The company's Revenue jumped on 10.0% in FY2015. Revenue decline was accompanies by EBITDA margin decline. EBITDA Margin decreased on 2.1 pp from 21.1% to 19.0% in FY2015.
Net Income marign dropped on 12.4 pp from 0.61% to -11.8% in FY2015.
Capital expenditures (CAPEX) and working capital investments
In FY2015 Bhushan Steel had CAPEX/Revenue of 16.2%. Bhushan Steel showed big decline in CAPEX/Revenue of 31.1 pp from 47.2% in FY2012 to 16.2% in FY2015. It's average CAPEX/Revenue for the last three years was 36.9%.To deliver this fast growth the company invested a large share of EBITDA (79.2%) to CAPEX.
Return on investment
The company operates at low but positive ROIC (2.64%) and negative ROE (-15.08%). ROIC decreased slightly on 1.5 pp from 4.1% to 2.6% in FY2015. ROE dropped on 15.6 pp from 0.54% to -15.1% in FY2015.
Leverage (Debt)
Debt level is 17.7x Net Debt / EBITDA and 17.7x Debt / EBITDA. Net Debt / EBITDA jumped on 4.8x from 12.9x to 17.7x in FY2015. Debt increased on 9.4% in FY2015 while cash surged on 59.8% in FY2015.
Appendix 1: Peers in Iron & Steel/Interm.Products
Below you can find Bhushan Steel 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 ($VISASTEEL) | -12.5% | 3.3% | -24.1% | 42.0% | |
| |
|---|
| Median (31 companies) | -30.7% | 11.9% | 8.8% | 3.4% | 9.2% |
|---|
| Bhushan Steel ($BHUSANSTL) | | 42.2% | 3.2% | -5.9% | 10.0% |
Top companies by EBITDA margin, %
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Jindal Steel & Power ($JINDALSTEL) | 48.3% | 37.5% | 30.5% | 28.1% | 29.8% |
| Sarda Energy & Minerals ($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% |
| Prakash Industries ($PRAKASH) | 20.7% | 17.8% | 13.0% | 14.5% | 2.2% |
| |
|---|
| Median (28 companies) | 13.0% | 9.4% | 9.0% | 7.0% | 9.9% |
|---|
| Bhushan Steel ($BHUSANSTL) | 29.0% | 31.2% | 32.3% | 28.1% | 20.4% |
Top companies by CAPEX/Revenue, %
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Jindal Steel & Power ($JINDALSTEL) | 64.7% | 34.2% | 47.6% | 69.6% | 26.4% |
| Jayaswal Neco Industries ($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% | |
| Uttam Galva Steels ($UTTAMSTL) | 8.0% | 11.0% | 8.2% | 18.2% | 5.3% |
| |
|---|
| Median (20 companies) | 11.9% | 7.5% | 10.4% | 6.6% | 5.3% |
|---|
| Bhushan Steel ($BHUSANSTL) | 81.1% | 47.2% | 44.0% | 50.4% | 16.2% |
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 ($JSWSTEEL) | 9.7% | 11.0% | 10.3% | 12.1% | 9.9% |
| |
|---|
| Median (40 companies) | 9.6% | 6.8% | 5.5% | 6.0% | 9.7% |
|---|
| Bhushan Steel ($BHUSANSTL) | 9.0% | 9.6% | 7.3% | 4.1% | 2.6% |
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 | |
| Jayaswal Neco Industries ($JAYNECOIND) | 3.4x | 4.7x | 7.2x | 8.6x | |
| |
|---|
| Median (29 companies) | 3.6x | 4.2x | 4.3x | 3.2x | 1.8x |
|---|
| Bhushan Steel ($BHUSANSTL) | 8.1x | 6.3x | 8.6x | 12.9x | 17.7x |
