Godrej Industries Net Debt / EBITDA surged on 2.8x from 7.9x to 10.7x in 2015 and Revenue surged on 16.6%

27-05-2015 • About Godrej Industries ($GODREJIND) • By InTwits

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

EBITDA Margin is relatively stable: 5.3% in FY2015 vs. 5.8% in FY2014 vs. 5.1% in FY2011
Godrej Industries has medium CAPEX intensity: 5 year average CAPEX/Revenue was 5.2%. At the same time it's in pair with industry average of 39.4%.
CAPEX is quite volatile: 4,955 in FY2015, 4,272 in FY2014, 6,924 in FY2013, 831 in FY2012, 1,652 in FY2011
The company has potentially unprofitable business model: ROIC is at 4.4%
It operates with high leverage: Net Debt/EBITDA is 10.7x while industry average is 2.2x

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

Godrej Industries ($GODREJIND) key annual financial indicators

mln. INR	2011	2012	2013	2014	2015	2015/2014
P&L
Revenue	43,498	56,121	69,643	79,179	92,299	16.6%
Gross Profit			63,236
SG&A					731
EBITDA	2,239	2,669	3,808	4,582	4,865	6.2%
Net Income	2,934	2,916	3,912	3,264	4,025	23.3%
Balance Sheet
Cash	2,430	2,094	5,775	3,057	2,418	-20.9%
Short Term Debt	13,433	16,760	18,109	27,810	37,236	33.9%
Long Term Debt	4,121	11,877	9,392	11,604	17,282	48.9%
Cash flow
Capex	1,652	831	6,924	4,272	4,955	16.0%
Ratios
Revenue growth	-60.0%	29.0%	24.1%	13.7%	16.6%
EBITDA growth	310.2%	19.2%	42.7%	20.3%	6.2%
Gross Margin			90.8%			0.0%
EBITDA Margin	5.1%	4.8%	5.5%	5.8%	5.3%	-0.5%
Net Income Margin	6.7%	5.2%	5.6%	4.1%	4.4%	0.2%
SG&A, % of revenue					0.8%	0.8%
CAPEX, % of revenue	3.8%	1.5%	9.9%	5.4%	5.4%	-0.0%
ROIC	4.3%	4.2%	5.1%	5.3%	4.4%	-0.9%
ROE	15.9%	13.6%	14.3%	11.2%	13.5%	2.3%
Net Debt/EBITDA	6.8x	9.9x	5.7x	7.9x	10.7x	2.8x

Revenue and profitability

Godrej Industries's Revenue surged on 16.6% in FY2015. Having declining revenue the company managed to increase EBITDA margin. EBITDA Margin increased on 5.4 pp from 18.2% to 23.5% in FY2015.

Net Income marign showed almost no change in FY2015.

Capital expenditures (CAPEX) and working capital investments

The company's CAPEX/Revenue was 5.4% in FY2015. The company's CAPEX/Revenue increased on 3.9 pp from 1.5% in FY2012 to 5.4% in FY2015. It's average CAPEX/Revenue for the last three years was 6.9%.To secure this fast growth Godrej Industries made large investments to CAPEX (102% of EBITDA).

Return on investment

The company operates at good ROE (13.50%) while ROIC is low (4.42%). ROIC decreased slightly on 0.92 pp from 5.3% to 4.4% in FY2015. ROE increased on 2.3 pp from 11.2% to 13.5% in FY2015.

Leverage (Debt)

Debt level is 10.7x Net Debt / EBITDA and 11.2x Debt / EBITDA. Net Debt / EBITDA jumped on 2.8x from 7.9x to 10.7x in FY2015. Debt jumped on 38.3% in FY2015 while cash dropped on 20.9% in FY2015.

Appendix 1: Peers in Commodity Chemicals

Below you can find Godrej Industries benchmarking vs. other companies in Commodity Chemicals 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
Shree Hari Chemicals Export ($SHHARICH)	-52.2%	-2.5%	-78.0%	299.5%
Jindal Poly Films ($JINDPOLBBPH)	-66.5%	-17.2%	-6.3%	131.7%
Bodal Chemicals ($BODALCHEM)	-51.3%	5.4%	-12.6%	80.0%
Kanoria Chemicals & Industries ($KANORICHEM)		-40.7%	27.2%	47.9%	-1.9%
Camphor & Allied Products ($CAMPHOR)	-49.0%	-6.7%	7.2%	42.7%
Median (35 companies)	-37.6%	15.5%	10.9%	10.6%	1.4%
Godrej Industries ($GODREJIND)		29.0%	24.1%	13.7%	16.6%

Top companies by EBITDA margin, %


Top 5	FY2011	FY2012	FY2013	FY2014	FY2015
Mysore Petro Chemicals ($MYSORPETRO)					47.1%
Aditya Birla Chemicals (India) ($ABCIL)	33.6%	26.8%	27.1%	23.6%	21.9%
Chemfab Alkalis ($CHEMFALKAL)	19.0%	22.3%	32.9%	24.2%	19.8%
Alkyl Amines Chemicals ($ALKYLAMINE)	13.3%	15.9%	16.0%	19.0%	18.3%
Balaji Amines ($BALAMINES)	18.3%	17.6%	15.5%	14.3%	16.4%
Median (27 companies)	13.3%	11.6%	8.4%	8.6%	7.2%
Godrej Industries ($GODREJIND)	5.1%	4.8%	5.5%	5.8%	5.3%

Top companies by CAPEX/Revenue, %


Top 5	FY2011	FY2012	FY2013	FY2014	FY2015
Chemfab Alkalis ($CHEMFALKAL)	5.1%	2.2%	15.8%	55.6%
Aditya Birla Chemicals (India) ($ABCIL)	5.9%	136.9%	24.2%	30.8%	15.0%
Jindal Poly Films ($JINDPOLBBPH)	2.9%	6.9%	2.1%	27.5%
Polyplex Corporation ($POLYPLEX)	6.0%	10.7%	41.3%	19.2%
Kanoria Chemicals & Industries ($KANORICHEM)	12.9%	25.1%	6.0%	13.4%	40.3%
Median (19 companies)	5.9%	5.3%	6.3%	5.9%	3.8%
Godrej Industries ($GODREJIND)	3.8%	1.5%	9.9%	5.4%	5.4%

Top companies by ROIC, %


Top 5	FY2011	FY2012	FY2013	FY2014	FY2015
Riddhi Siddhi Gluco Biols ($RIDDHI)	-0.2%	-1.3%	-0.6%	61.1%
Bodal Chemicals ($BODALCHEM)		-1.3%	3.3%	39.0%
Elantas Beck India ($ELANTAS)	17.5%	20.4%	33.9%	31.0%
Alkyl Amines Chemicals ($ALKYLAMINE)	10.3%	16.0%	18.7%	25.0%	23.7%
Aarti Industries ($AARTIIND)	13.1%	15.9%	19.1%	17.2%	17.9%
Median (59 companies)	10.7%	9.2%	9.8%	9.9%	12.5%
Godrej Industries ($GODREJIND)	4.3%	4.2%	5.1%	5.3%	4.4%

Top companies by Net Debt / EBITDA


Top 5	FY2011	FY2012	FY2013	FY2014	FY2015
India Glycols ($INDIAGLYCO)	8.2x	4.8x	3.7x	8.5x
Polyplex Corporation ($POLYPLEX)	0.6x	0.9x	6.8x	7.1x
Link Pharma Chem ($LINKPH)	71.1x	3.4x	4.1x	6.2x
Refnol Resins & Chemicals ($REFNOL)			4.1x	5.6x	0.0x
Cosmo Films ($COSMOFILMS)	4.0x	4.1x	4.8x	4.9x	3.6x
Median (41 companies)	2.4x	2.6x	3.0x	0.8x	1.5x
Godrej Industries ($GODREJIND)	6.8x	9.9x	5.7x	7.9x	10.7x

Godrej Industries stock price chart

Godrej Industries financials

mln.	FY2010	FY2011	FY2012

Revenue	108,850	43,498	56,121
EBITDA	545.8	2,239	2,669
Net income	1,682	2,934	2,916
CAPEX	946.0	1,652	831.2
Debt	16,048	17,554	28,637
Cash	847.3	2,430	2,094

About Godrej Industries

Godrej Industries Limited manufactures and markets ole-chemicals, precursors and derivatives, and bulk edible oils in India and internationally. It provides fatty alcohols, including lauryl, cetyl, stearyl, cetostearyl, and behenyl for use in personal care, household detergents, industrial and hard-surface cleaning, and other industrial applications; and fatty acids comprising stearic acids, oleic acids, fractionated fatty acids, and coconut fatty acids. The company also offers surfactants, such as alpha olefin sulphonates; sodium lauryl sulphates for use in personal care products, detergents, pharmaceuticals, and agrochemicals; and sodium lauryl ether sulphates for use in home care, personal care, and industrial applications, as well as glycerine, an organic material for manufacturing pharmaceuticals. In addition, the company is engaged in producing and selling compound feeds for cattle, poultry, shrimp, and fish; processing and trading refined vegetable oils and vanaspati; oil palm plantation acitivities; and the development, sale, leasing, and licensing of real estate properties. Further, it is involved in the processing, production, and sale of fruit pulp, tomato puree, fruit juices, nectors and drinks, other beverages, and confectionary products, as well as in the sale of tea. Additionally, the company is engaged in the finance and investment activities; and integrated poultry, agri inputs and tissue culture, seeds business, and gourmet foods businesses, as well as in the energy generation through windmills. It operates 33 gourmet food stores. The company was formerly known as Godrej Soaps Limited and changed its name to Godrej Industries Limited in April 2001. Godrej Industries Limited was founded in 1988 and is headquartered in Mumbai, India. Godrej Industries Limited is a subsidiary of Godrej & Boyce Mfg. Co. Ltd.