Jindal Steel & Power Net Income dropped on 167% in 2015 while EBITDA Margin increased slightly on 1.6 pp from 28.1% to 29.8%

27-05-2015 • About Jindal Steel & Power ($JINDALSTEL) • By InTwits

Jindal Steel & Power reported FY2015 financial results today. Overall the company's long term financial model is characterised by the following facts:

Jindal Steel & Power has high CAPEX intensity: 5 year average CAPEX/Revenue was 48.5%. At the same time it's a lot of higher than industry average of 9.0%.
CAPEX is quite volatile: 51,012 in FY2015, 134,184 in FY2014, 94,313 in FY2013, 62,214 in FY2012, 84,887 in FY2011
The company has potentially unprofitable business model: ROIC is at 4.6%
It operates with medium-size leverage: Net Debt/EBITDA is 7.7x 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.

Jindal Steel & Power ($JINDALSTEL) key annual financial indicators

mln. INR	2011	2012	2013	2014	2015	2015/2014
P&L
Revenue	131,122	182,086	198,068	192,863	193,591	0.4%
EBITDA	63,279	68,306	60,485	54,259	57,601	6.2%
Net Income	37,539	39,649	29,101	19,104	-12,781	-166.9%
Balance Sheet
Cash	4,498	1,327	1,878	9,498	11,290	18.9%
Short Term Debt	65,952	59,112	92,165	106,319	101,045	-5.0%
Long Term Debt	73,776	111,796	154,016	259,003	353,996	36.7%
Cash flow
Capex	84,887	62,214	94,313	134,184	51,012	-62.0%
Ratios
Revenue growth	-47.4%	38.9%	8.8%	-2.6%	0.4%
EBITDA growth	7.1%	7.9%	-11.4%	-10.3%	6.2%
EBITDA Margin	48.3%	37.5%	30.5%	28.1%	29.8%	1.6%
Net Income Margin	28.6%	21.8%	14.7%	9.9%	-6.6%	-16.5%
CAPEX, % of revenue	64.7%	34.2%	47.6%	69.6%	26.4%	-43.2%
ROIC	19.1%	14.9%	9.7%	6.3%	4.6%	-1.7%
ROE	30.6%	24.6%	14.8%	8.7%	-5.9%	-14.6%
Net Debt/EBITDA	2.1x	2.5x	4.0x	6.6x	7.7x	1.1x

Revenue and profitability

Jindal Steel & Power's Revenue showed almost no change in FY2015. Revenue growth happened at the same time with EBITDA margin expansion. EBITDA Margin increased slightly on 1.6 pp from 28.1% to 29.8% in FY2015.

Net Income marign dropped on 16.5 pp from 9.9% to -6.6% in FY2015.

Capital expenditures (CAPEX) and working capital investments

In FY2015 the company had CAPEX/Revenue of 26.4%. The company's CAPEX/Revenue decreased on 7.8 pp from 34.2% in FY2012 to 26.4% in FY2015. For the last three years the average CAPEX/Revenue was 47.8%.The company maintained rich investment policy and has spent a big chunk of EBITDA (88.6%) to CAPEX.

Return on investment

The company operates at low but positive ROIC (4.61%) and negative ROE (-5.86%). ROIC decreased slightly on 1.7 pp from 6.3% to 4.6% in FY2015. ROE dropped on 14.6 pp from 8.7% to -5.9% in FY2015.

Leverage (Debt)

Debt level is 7.7x Net Debt / EBITDA and 7.9x Debt / EBITDA. Net Debt / EBITDA surged on 1.1x from 6.6x to 7.7x in FY2015. Debt jumped on 24.6% in FY2015 while cash surged on 18.9% in FY2015.

Management team

Ravi K Uppal is a the company's CEO. Ravi K Uppal has spent 6 years at the company.

Appendix 1: Peers in Iron & Steel/Interm.Products

Below you can find Jindal Steel & Power 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 ($VISASTEEL)	-12.5%	3.3%	-24.1%	42.0%
Median (31 companies)	-30.7%	11.9%	3.2%	3.4%	10.0%
Jindal Steel & Power ($JINDALSTEL)		38.9%	8.8%	-2.6%	0.4%

Top companies by EBITDA margin, %


Top 5	FY2011	FY2012	FY2013	FY2014	FY2015
Bhushan Steel ($BHUSANSTL)	29.0%	31.2%	32.3%	28.1%	20.4%
Sarda Energy & Minerals ($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 ($PRAKASH)	20.7%	17.8%	13.0%	14.5%	2.2%
Median (28 companies)	13.0%	9.4%	9.0%	7.0%	9.9%
Jindal Steel & Power ($JINDALSTEL)	48.3%	37.5%	30.5%	28.1%	29.8%

Top companies by CAPEX/Revenue, %


Top 5	FY2011	FY2012	FY2013	FY2014	FY2015
Bhushan Steel ($BHUSANSTL)	81.1%	47.2%	44.0%	50.4%	16.2%
Jayaswal Neco Industries ($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 ($UTTAMSTL)	8.0%	11.0%	8.2%	18.2%	5.3%
Median (20 companies)	11.9%	7.5%	10.4%	6.6%	5.3%
Jindal Steel & Power ($JINDALSTEL)	64.7%	34.2%	47.6%	69.6%	26.4%

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 ($JSWSTEEL)	9.7%	11.0%	10.3%	12.1%	9.9%
Median (40 companies)	9.4%	6.8%	5.5%	5.5%	9.7%
Jindal Steel & Power ($JINDALSTEL)	19.1%	14.9%	9.7%	6.3%	4.6%

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
Bhushan Steel ($BHUSANSTL)	8.1x	6.3x	8.6x	12.9x	17.7x
Median (29 companies)	3.8x	4.6x	4.4x	3.2x	1.8x
Jindal Steel & Power ($JINDALSTEL)	2.1x	2.5x	4.0x	6.6x	7.7x

Jindal Steel & Power stock price chart

Jindal Steel & Power financials

mln.	FY2010	FY2011	FY2012

Revenue	249,216	131,122	182,086
EBITDA	59,109	63,279	68,306
Net income	35,730	37,539	39,649
CAPEX	65,774	84,887	62,214
Debt	86,043	139,728	170,908
Cash	1,128	4,498	1,327

About Jindal Steel & Power

Jindal Steel & Power Limited operates in steel, mining, power, and infrastructure sectors in India and internationally. It operates through Iron & Steel, and Power segments. The company offers crane and track rails, flash-butt welded rail panels; and medium and heavy hot rolled parallel flange beams and column sections for the infrastructure, oil and gas, and construction sectors. It also provides discrete and cut to length plates, and hot rolled coils that are used in general engineering and structural fabrication, railway wagons, pressure vessels and boilers, oil and gas pipelines, bridges and flyovers, shipbuilding, earthmoving equipment, wind mills, and defence equipment; angles and channels for infrastructure, industrial construction, and light construction segments; TMT rebars; wire rods for various applications; and fabricated sections. In addition, the company offers speed floor that is used in steel frame structures, RCC frame buildings, poured insitu or precast concrete frames, light gauge steel frames, and conventional structural brick wall constructions; semi-finished products for integrated mills, rolling facilities, and pipe industries; and coal-based sponge iron products. Further, it operates coal and iron ore mines located at various locations in India and internationally; a 1000 MW thermal power plant in Tamnar, Chhattisgarh; and 24 MW wind energy project at Satara in Maharashtra, as well as a 258 KM, 400 KV double circuit transmission lines for distribution of power in India. The company was incorporated in 1979 and is based in New Delhi, India.