Trent reports 797% Net Income growth while 2.1% Revenue decline
27-05-2015 • About Trent (
$TRENT) • By InTwits
Trent reported FY2015 financial results today. Overall the company's long term financial model is characterised by the following facts:
- Trent is a company in decline: FY2015 revenue growth was -2.1%, 5 years revenue CAGR was -3.7%
- EBITDA Margin is quite volatile: 3.3% in FY2015, 0.7% in FY2014, -0.4% in FY2013, -2.3% in FY2012, 1.5% in FY2011
- Trent has medium CAPEX intensity: 5 year average CAPEX/Revenue was 7.8%. At the same time it's a lot of higher than industry average of 6.0%.
- CAPEX is quite volatile: 948 in FY2015, 606 in FY2014, 393 in FY2013, 486 in FY2012, 60.3 in FY2011
- The company has potentially unprofitable business model: ROIC is at 0.1%
Below you can find a comprehensive analysis of the key data driving the company's performance and stock price.
Trent ($TRENT) key annual financial indicators
| mln. INR | 2011 | 2012 | 2013 | 2014 | 2015 | 2015/2014 |
|---|
P&L
|
|---|
| Revenue | 15,109 | 18,449 | 21,320 | 23,330 | 22,843 | -2.1% |
| EBITDA | 229 | -426 | -81 | 167 | 761 | 356.6% |
| Net Income | 75 | -378 | -268 | -186 | 1,293 | |
Balance Sheet
|
|---|
| Cash | 354 | 402 | 814 | 556 | 516 | -7.2% |
| Short Term Debt | 268 | 513 | 105 | 66 | 44 | -33.6% |
| Long Term Debt | 2,250 | 2,500 | 3,250 | 3,250 | 1,125 | -65.4% |
Cash flow
|
|---|
| Capex | 1,822 | 1,632 | 1,159 | 1,361 | 1,580 | 16.0% |
Ratios
|
|---|
| Revenue growth | -45.4% | 22.1% | 15.6% | 9.4% | -2.1% | |
| EBITDA growth | 1.3% | -286.0% | -80.9% | -304.7% | 356.6% | |
| EBITDA Margin | 1.5% | -2.3% | -0.4% | 0.7% | 3.3% | 2.6% |
| Net Income Margin | 0.5% | -2.0% | -1.3% | -0.8% | 5.7% | 6.5% |
| CAPEX, % of revenue | 12.1% | 8.8% | 5.4% | 5.8% | 6.9% | 1.1% |
| ROIC | -0.8% | -6.2% | -3.5% | -2.6% | 0.1% | 2.7% |
| ROE | 0.9% | -3.5% | -2.2% | -1.7% | 10.7% | 12.4% |
| Net Debt/EBITDA | 9.5x | | | 16.6x | 0.9x | -15.7x |
Revenue and profitability
The company's Revenue decreased on 2.1% in FY2015. Having declining revenue the company managed to increase EBITDA margin. EBITDA Margin increased on 2.6 pp from 0.71% to 3.3% in FY2015.
Net Income marign increased on 6.5 pp from -0.80% to 5.7% in FY2015.
Capital expenditures (CAPEX) and working capital investments
Trent's CAPEX/Revenue was 6.9% in FY2015. CAPEX/Revenue decreased slightly on 1.9 pp from 8.8% in FY2012 to 6.9% in FY2015. Average CAPEX/Revenue for the last three years was 6.1%.The company has spent a lot to CAPEX (208% of EBITDA) which didn't stop revenue from falling.
Return on investment
The company operates at low ROIC (0.12%) and ROE (10.72%). ROIC increased on 2.7 pp from -2.6% to 0.12% in FY2015. ROE jumped on 12.4 pp from -1.7% to 10.7% in FY2015.
Leverage (Debt)
Company's Net Debt / EBITDA is 0.9x and Debt / EBITDA is 1.5x. Net Debt / EBITDA dropped on 15.7x from 16.6x to 0.9x in FY2015. Debt dropped on 64.8% in FY2015 while cash decreased on 7.2% in FY2015.
Appendix 1: Peers in Department Stores
Below you can find Trent benchmarking vs. other companies in Department Stores 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 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| V-Mart Retail ($VMART) | | 31.7% | 36.0% | 49.9% | 25.3% |
| Pantaloons Fashion & Retail ($PFRL) | | 36.3% | 7,273.1% | 29.3% | 11.4% |
| Future Market Networks ($FMNL) | -42.8% | 58.6% | -3.8% | 1.1% | |
| |
|---|
| Median (3 companies) | -42.8% | 36.3% | 36.0% | 29.3% | 18.3% |
|---|
| Trent ($TRENT) | | 22.1% | 15.6% | 9.4% | -2.1% |
Top companies by EBITDA margin, %
| Top | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Store One Retail India ($STOREONE) | -1,229.0% | | | | 31.2% |
| V-Mart Retail ($VMART) | 9.0% | 10.3% | 10.5% | 9.4% | 8.9% |
| Pantaloons Fashion & Retail ($PFRL) | 1.0% | 2.5% | 5.5% | 2.1% | 4.0% |
| |
|---|
| Median (3 companies) | 5.0% | 10.3% | 8.0% | 9.4% | 8.9% |
|---|
| Trent ($TRENT) | 1.5% | -2.3% | -0.4% | 0.7% | 3.3% |
Top companies by CAPEX/Revenue, %
| Top | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Pantaloons Fashion & Retail ($PFRL) | 0.0% | 0.0% | 2.3% | 5.7% | 6.3% |
| V-Mart Retail ($VMART) | 4.4% | 4.8% | 5.8% | 5.8% | 4.7% |
| |
|---|
| Median (2 companies) | 2.3% | 4.8% | 4.1% | 5.8% | 5.5% |
|---|
| Trent ($TRENT) | 12.1% | 8.8% | 5.4% | 5.8% | 6.9% |
Top companies by ROIC, %
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| V-Mart Retail ($VMART) | 19.7% | 26.3% | 23.5% | 21.9% | 26.3% |
| Pantaloons Fashion & Retail ($PFRL) | | 33.2% | 1.3% | -3.6% | -6.8% |
| Rei Six Ten Retail ($REISIXTEN) | 31.2% | 1.2% | -3.4% | | |
| Future Market Networks ($FMNL) | | 2.5% | | | |
| Store One Retail India ($STOREONE) | | | | | |
| |
|---|
| Median (5 companies) | 25.4% | 14.4% | 1.3% | 9.1% | 9.8% |
|---|
| Trent ($TRENT) | -0.8% | -6.2% | -3.5% | -2.6% | 0.1% |
Top companies by Net Debt / EBITDA
| Top | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Pantaloons Fashion & Retail ($PFRL) | -0.3x | -0.1x | 23.9x | 30.0x | 17.8x |
| V-Mart Retail ($VMART) | 1.9x | 1.3x | 0.5x | 0.8x | 0.4x |
| Store One Retail India ($STOREONE) | | | | | 0.0x |
| |
|---|
| Median (3 companies) | 1.0x | 0.6x | 0.5x | 30.0x | 0.4x |
|---|
| Trent ($TRENT) | 9.5x | | | 16.6x | 0.9x |
