Shrenuj & Co revenue growth decelerated to 18.1% in FY2015 vs. 20.2% a year earliner

27-05-2015 • About Shrenuj & Co ($SHRENUJ) • By InTwits

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

• Shrenuj & Co has low CAPEX intensity: 5 year average CAPEX/Revenue was 0.5%.
• The company has potentially unprofitable business model: ROIC is at 5.3%
• It operates with high leverage: Net Debt/EBITDA is 13.5x while industry average is 4.5x

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

Shrenuj & Co ($SHRENUJ) key annual financial indicators

mln. INR	2011	2012	2013	2014	2015	2015/2014
P&L
Revenue	24,565	31,506	38,621	46,432	54,851	18.1%
EBITDA	1,709	2,274	2,453	2,542	2,468	-2.9%
Net Income	568	703	734	897	733	-18.3%
Balance Sheet
Cash	377	1,015	663	836	1,460	74.7%
Short Term Debt	13,151	18,713	22,552	26,076	30,030	15.2%
Long Term Debt	1,883	3,458	5,523	4,538	4,779	5.3%
Cash flow
Capex	182	114	249	173	75	-56.8%
Ratios
Revenue growth	-62.1%	28.3%	22.6%	20.2%	18.1%
EBITDA growth	14.0%	33.1%	7.9%	3.6%	-2.9%
EBITDA Margin	7.0%	7.2%	6.4%	5.5%	4.5%	-1.0%
Net Income Margin	2.3%	2.2%	1.9%	1.9%	1.3%	-0.6%
CAPEX, % of revenue	0.7%	0.4%	0.6%	0.4%	0.1%	-0.2%
ROIC	8.8%	8.8%	7.2%	6.3%	5.3%	-1.0%
ROE	13.7%	12.3%	10.2%	10.1%	7.4%	-2.7%
Net Debt/EBITDA	8.6x	9.3x	11.2x	11.7x	13.5x	1.8x

Revenue and profitability

The company's Revenue jumped on 18.1% in FY2015. Having declining revenue the company managed to increase EBITDA margin. EBITDA Margin increased on 4.2 pp from 28.9% to 33.1% in FY2015.

Net Income marign decreased slightly on 0.60 pp from 1.9% to 1.3% in FY2015.

Capital expenditures (CAPEX) and working capital investments

Shrenuj & Co's CAPEX/Revenue was 0.14% in FY2015. CAPEX/Revenue showed almost no change from FY2012 to FY2015. It's average CAPEX/Revenue for the last three years was 0.38%.

Return on investment

The company operates at low ROIC (5.33%) and ROE (7.38%). ROIC decreased slightly on 0.97 pp from 6.3% to 5.3% in FY2015. ROE decreased on 2.7 pp from 10.1% to 7.4% in FY2015.

Leverage (Debt)

Company's Net Debt / EBITDA is 13.5x and Debt / EBITDA is 14.1x. Net Debt / EBITDA surged on 1.8x from 11.7x to 13.5x in FY2015. Debt surged on 13.7% in FY2015 while cash jumped on 74.7% in FY2015.

Appendix 1: Peers in Other Apparels & Accessories

Below we provide Shrenuj & Co benchmarking against other companies in Other Apparels & Accessories 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
Mini Diamonds (India) ($MINID)	-85.8%	35.0%	59.6%	117.1%
Page Industries ($PAGEIND)	-73.3%	39.0%	26.3%	37.5%
Bhartiya International ($BIL)		28.4%	20.9%	36.7%	34.7%
Celebrity Fashions ($CELEBRITY)		1.0%	-8.6%	35.2%	-21.7%
Super Tannery ($SUPTANERY)	-30.0%	-1.4%	0.3%	34.6%
Median (23 companies)	6.9%	10.1%	19.1%	14.1%	3.8%
Shrenuj & Co ($SHRENUJ)		28.3%	22.6%	20.2%	18.1%

Top companies by EBITDA margin, %

Top 5	FY2011	FY2012	FY2013	FY2014	FY2015
Arrow Textiles ($ARROWTEX)					25.2%
Rupa & Company ($RUPA)	10.7%	12.7%	15.0%	15.3%	14.5%
Ashapura Intimates Fashion ($AIFL)	8.9%	9.5%	10.5%	10.7%	13.7%
Cantabil Retail India ($CANTABIL)	13.8%	-10.4%	-22.3%		10.4%
Bhartiya International ($BIL)	10.6%	11.4%	9.2%	8.9%	9.5%
Median (17 companies)	8.7%	7.6%	5.5%	6.0%	5.6%
Shrenuj & Co ($SHRENUJ)	7.0%	7.2%	6.4%	5.5%	4.5%

Top companies by CAPEX/Revenue, %

Top 5	FY2011	FY2012	FY2013	FY2014	FY2015
Page Industries ($PAGEIND)	5.8%	4.0%	5.2%	4.4%
Zodiac Clothing Co ($ZODIACLOTH)	9.3%	5.7%	3.9%	4.0%	5.0%
Tara Jewels ($TARAJEWELS)	1.8%	1.6%	1.3%	3.1%
Bhartiya International ($BIL)	4.5%	4.5%	3.9%	1.8%	2.1%
Rupa & Company ($RUPA)	4.5%	1.9%	3.9%	1.7%	2.2%
Median (14 companies)	1.9%	1.8%	1.7%	1.2%	0.7%
Shrenuj & Co ($SHRENUJ)	0.7%	0.4%	0.6%	0.4%	0.1%

Top companies by ROIC, %

Top 5	FY2011	FY2012	FY2013	FY2014	FY2015
Page Industries ($PAGEIND)	44.2%	54.9%	58.5%	61.6%
Oscar Global ($OSCARGLO)			12.6%	52.3%
Virat Industries ($VIRAT)	13.2%	20.7%	26.2%	30.9%
Rupa & Company ($RUPA)	20.2%	22.4%	27.1%	25.8%	23.8%
Ashapura Intimates Fashion ($AIFL)	21.7%	24.1%	19.1%	23.4%	39.9%
Median (40 companies)	10.4%	10.1%	7.2%	11.0%	7.7%
Shrenuj & Co ($SHRENUJ)	8.8%	8.8%	7.2%	6.3%	5.3%

Top companies by Net Debt / EBITDA

Top 5	FY2011	FY2012	FY2013	FY2014	FY2015
Thangamayil Jewellery ($THANGAMAYL)	2.2x	2.2x	2.6x	11.9x	61.2x
Pearl Global Industries ($PGIL)	8.4x	4.5x	4.7x	7.0x	2.7x
C. Mahendra Exports ($CMAHENDRA)	4.1x	4.5x	4.9x	6.0x
Asian Star Co ($ASTAR)	8.2x	7.1x	7.1x	5.9x	4.8x
Tribhovandas Bhimji Zaveri ($TBZ)	2.4x	1.6x	2.7x	4.1x	6.6x
Median (24 companies)	2.7x	2.2x	2.7x	0.0x	1.9x
Shrenuj & Co ($SHRENUJ)	8.6x	9.3x	11.2x	11.7x	13.5x

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