Dcm reports 31.9% EBITDA decline and 3.1 pp EBITDA Margin decline from 9.1% to 6.0%

28-05-2015 • About Dcm ($DCM) • By InTwits

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

EBITDA Margin is quite volatile: 6.0% in FY2015, 9.1% in FY2014, 8.5% in FY2013, 2.0% in FY2012, 14.4% in FY2011
The company has potentially unprofitable business model: ROIC is at 2.6%
It operates with high leverage: Net Debt/EBITDA is 5.5x while industry average is 1.5x

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

Dcm ($DCM) key annual financial indicators

mln. INR	2011	2012	2013	2014	2015	2015/2014
P&L
Revenue	6,856	7,524	7,710	8,974	9,293	3.6%
EBITDA	984	152	652	813	554	-31.9%
Net Income	376	78	178	377	-43	-111.5%
Balance Sheet
Cash	42	26	128	126	173	36.8%
Short Term Debt	2,536	1,665	1,841	2,039	1,764	-13.5%
Long Term Debt	580	412	577	1,117	1,438	28.7%
Cash flow
Capex	209	203	699	1,037		-100.0%
Ratios
Revenue growth	-37.6%	9.8%	2.5%	16.4%	3.6%
EBITDA growth	296.1%	-84.6%	329.5%	24.8%	-31.9%
EBITDA Margin	14.4%	2.0%	8.5%	9.1%	6.0%	-3.1%
Net Income Margin	5.5%	1.0%	2.3%	4.2%	-0.5%	-4.7%
CAPEX, % of revenue	3.0%	2.7%	9.1%	11.6%		-11.6%
ROIC	18.0%	-0.8%	10.3%	11.3%	2.6%	-8.7%
ROE	22.8%	4.1%	8.9%	17.6%	-2.0%	-19.6%
Net Debt/EBITDA	3.1x	13.5x	3.5x	3.7x	5.5x	1.7x

Revenue and profitability

Dcm's Revenue increased on 3.6% in FY2015. Revenue growth was financed by EBITDA margin decline. EBITDA Margin decreased on 3.1 pp from 9.1% to 6.0% in FY2015.

Net Income marign decreased on 4.7 pp from 4.2% to -0.47% in FY2015.

Return on investment

The company operates at low but positive ROIC (2.63%) and negative ROE (-2.00%). ROIC decreased on 8.7 pp from 11.3% to 2.6% in FY2015. ROE dropped on 19.6 pp from 17.6% to -2.0% in FY2015.

Leverage (Debt)

Company's Net Debt / EBITDA is 5.5x and Debt / EBITDA is 5.8x. Net Debt / EBITDA jumped on 1.7x from 3.7x to 5.5x in FY2015. Debt increased slightly on 1.4% in FY2015 while cash jumped on 36.8% in FY2015.

Appendix 1: Peers in Textiles

Below you can find Dcm benchmarking vs. other companies in Textiles 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
Olympia Industries ($OLYMPTX)	-99.6%	-58.0%	-96.6%	74,809.1%
Gujarat Cotex ($GUJCOTEX)		-6.2%	-66.0%	176.2%	-52.0%
T T ($TTL)	-39.2%	-21.8%	28.7%	47.8%
Filatex India ($FILATEX)	-74.3%	-2.7%	158.7%	44.5%
Gtn Textiles ($GTNTEX)		-8.8%	51.2%	39.4%	-36.3%
Median (73 companies)	-34.6%	4.8%	10.0%	14.2%	-0.1%
Dcm ($DCM)		9.8%	2.5%	16.4%	3.6%

Top companies by EBITDA margin, %


Top 5	FY2011	FY2012	FY2013	FY2014	FY2015
Sil Investments ($SILINV)					93.8%
Swadeshi Polytex ($SWADPOL)					64.4%
Binny ($BINNY)					60.9%
Ruby Mills ($RUBYMILLS)	25.2%	28.3%	25.1%	28.6%	29.3%
Premier Synthetics ($PREMSYN)					25.9%
Median (55 companies)	12.7%	6.5%	9.5%	10.1%	8.1%
Dcm ($DCM)	14.4%	2.0%	8.5%	9.1%	6.0%

Top companies by CAPEX/Revenue, %


Top 5	FY2011	FY2012	FY2013	FY2014	FY2015
Nitin Spinners ($NITINSPIN)	0.2%	1.9%	2.6%	8.0%	42.3%
Maharaja Shree Umaid Mills ($MAHASHR)	2.4%	18.6%	24.1%	6.8%	16.8%
SRF ($SRF)	0.0%	0.0%	18.7%	20.0%	11.4%
Welspun India ($WELSPUNIND)	11.3%	5.6%	7.8%	16.4%	10.9%
Sutlej Textiles & Industries ($SUTLEJTEX)	2.3%	3.4%	1.8%	5.6%	10.7%
Median (17 companies)	4.5%	3.4%	5.3%	6.7%	6.8%

Top companies by ROIC, %


Top 5	FY2011	FY2012	FY2013	FY2014	FY2015
Nitin Spinners ($NITINSPIN)	13.8%	6.0%	19.5%	21.5%	17.5%
Sutlej Textiles & Industries ($SUTLEJTEX)	16.0%	9.5%	13.6%	19.8%	14.6%
Vardhman Textiles ($VTL)	15.5%	6.6%	11.9%	17.3%	8.5%
Maral Overseas ($MARALOVER)		4.6%	14.1%	16.0%
Rswm ($RSWM)	17.4%	2.2%	15.2%	15.5%	11.8%
Median (126 companies)	10.1%	3.6%	9.0%	8.9%	8.5%
Dcm ($DCM)	18.0%	-0.8%	10.3%	11.3%	2.6%

Top companies by Net Debt / EBITDA


Top 5	FY2011	FY2012	FY2013	FY2014	FY2015
Jaybharat Textiles & Real Estate ($JAYTEX)	8.4x	10.9x	53.6x	23.8x
Sree Jayalakshmi Autospin ($SREEJAYA)	3.4x		9.7x	12.8x
Bombay Rayon Fashions ($BRFL)	5.9x	4.9x	4.9x	11.6x	10.0x
Sel Manufacturing Company ($SELMCL)	5.6x	9.4x	6.6x	11.5x
Ruby Mills ($RUBYMILLS)	15.9x	12.6x	15.3x	10.8x	8.6x
Median (69 companies)	3.9x	3.8x	3.2x	0.0x	0.0x
Dcm ($DCM)	3.1x	13.5x	3.5x	3.7x	5.5x

Dcm stock price chart

Dcm financials

mln.	FY2010	FY2011	FY2012

Revenue	10,981	6,856	7,524
EBITDA	248.5	984.4	151.8
Net income	656.1	375.5	77.939
CAPEX	89.735	208.6	203.4
Debt	1,869	3,116	2,077
Cash	97.720	42.014	26.490

About Dcm

DCM Limited, together with its subsidiaries, engages in the cotton yarn, information technology (IT), real estate, and grey iron castings businesses in India and internationally. The Textiles segment manufactures and sells cotton yarn, as well as exports it cotton yarn primarily to Portugal, Egypt, South Korea, Brazil, Hong Kong, China, Bangladesh, Italy, the United States, and Peru. The IT Services segment provides IT Infrastructure services and software development services, such as system administration, storage management, backup recovery, and disaster management, as well as on-site staffing services. The Real Estate segment develops a real estate site located at Bara Hindu Rao/Kishan Ganj, Delhi. The Grey Iron Castings segment manufactures grey iron castings. The Other segment is involved in leasing/financing, investing, and other activities. The company was formerly known as Delhi Cloth & General Mills Co. Limited and changed its name to DCM Limited in October 1983. DCM Limited was founded in 1889 and is based in New Delhi, India.