Hindalco Industries CAPEX dropped on 36.6% in 2015 while Revenue surged on 18.4%
28-05-2015 • About Hindalco Industries (
$HINDALCO) • By InTwits
Hindalco Industries reported FY2015 financial results today. Overall the company's long term financial model is characterised by the following facts:
- Hindalco Industries has high CAPEX intensity: 5 year average CAPEX/Revenue was 11.6%. At the same time it's a lot of higher than industry average of 8.9%.
- CAPEX is quite volatile: 920 in FY2015, 1,890 in FY2014, 550 in FY2013, 1,300 in FY2012, 990 in FY2011
- The company has potentially unprofitable business model: ROIC is at 4.9%
- It operates with high leverage: Net Debt/EBITDA is 7.2x while industry average is 1.3x
Below you can find a comprehensive analysis of the key data driving the company's performance and stock price.
Hindalco Industries ($HINDALCO) key annual financial indicators
| mln. INR | 2011 | 2012 | 2013 | 2014 | 2015 | 2015/2014 |
|---|
P&L
|
|---|
| Revenue | 718,024 | 809,286 | 801,363 | 873,186 | 1,034,060 | 18.4% |
| EBITDA | 79,068 | 88,416 | 82,855 | 81,545 | 89,568 | 9.8% |
| Net Income | 24,564 | 33,970 | 30,269 | 21,750 | 8,542 | -60.7% |
Balance Sheet
|
|---|
| Cash | 21,740 | 27,397 | 21,894 | 35,401 | 43,727 | 23.5% |
| Short Term Debt | 42,071 | 39,147 | 70,943 | 108,117 | 130,814 | 21.0% |
| Long Term Debt | 252,532 | 371,272 | 498,569 | 539,441 | 553,862 | 2.7% |
Cash flow
|
|---|
| Capex | 79,086 | 125,119 | 118,710 | 94,236 | 59,776 | -36.6% |
Ratios
|
|---|
| Revenue growth | 18.6% | 12.7% | -1.0% | 9.0% | 18.4% | |
| EBITDA growth | -16.5% | 11.8% | -6.3% | -1.6% | 9.8% | |
| EBITDA Margin | 11.0% | 10.9% | 10.3% | 9.3% | 8.7% | -0.7% |
| Net Income Margin | 3.4% | 4.2% | 3.8% | 2.5% | 0.8% | -1.7% |
| CAPEX, % of revenue | 11.0% | 15.5% | 14.8% | 10.8% | 5.8% | -5.0% |
| ROIC | 8.7% | 8.6% | 6.2% | 4.6% | 4.9% | 0.3% |
| ROE | 9.7% | 11.1% | 9.0% | 5.7% | 2.2% | -3.6% |
| Net Debt/EBITDA | 3.5x | 4.3x | 6.6x | 7.5x | 7.2x | -0.4x |
Revenue and profitability
The company's Revenue surged on 18.4% in FY2015. Revenue decline was accompanies by EBITDA margin decline. EBITDA Margin decreased on 2.1 pp from 11.1% to 9.1% in FY2015.
Net Income marign decreased slightly on 1.7 pp from 2.5% to 0.83% in FY2015.
Capital expenditures (CAPEX) and working capital investments
The company's CAPEX/Revenue was 5.8% in FY2015. Hindalco Industries's CAPEX/Revenue decreased on 9.7 pp from 15.5% in FY2012 to 5.8% in FY2015. It's average level of CAPEX/Revenue for the last three years was 10.5%.Hindalco Industries invested a big chunk of EBITDA (66.7%) to CAPEX to fuel its growth.
Return on investment
The company operates at low ROIC (4.91%) and ROE (2.16%). ROIC showed almost no change in FY2015. ROE decreased on 3.6 pp from 5.7% to 2.2% in FY2015.
Leverage (Debt)
Company's Net Debt / EBITDA is 7.2x and Debt / EBITDA is 7.6x. Net Debt / EBITDA dropped on 0.4x from 7.5x to 7.2x in FY2015. Debt increased on 5.7% in FY2015 while cash jumped on 23.5% in FY2015.
Appendix 1: Peers in Aluminium
Below you can find Hindalco Industries benchmarking vs. other companies in Aluminium 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 |
|---|
| Bothra Metals & Alloys ($BMAL) | -67.0% | 12.1% | 57.0% | 27.3% | |
| Gujarat Foils ($GUJFOIL) | -61.0% | 16.7% | 31.4% | 25.2% | |
| Pg Foils ($PGFOILQ) | -46.6% | 36.1% | -4.3% | 2.6% | |
| Alicon Castalloy ($ALICON) | | 47.1% | 11.9% | 1.5% | 34.0% |
| |
|---|
| Median (4 companies) | -61.0% | 26.4% | 21.7% | 13.9% | 34.0% |
|---|
| Hindalco Industries ($HINDALCO) | | 12.7% | -1.0% | 9.0% | 18.4% |
Top companies by EBITDA margin, %
| Top | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Gujarat Foils ($GUJFOIL) | 10.1% | | 12.3% | 11.7% | |
| Alicon Castalloy ($ALICON) | 12.6% | 9.8% | 8.8% | 10.0% | 9.9% |
| Bothra Metals & Alloys ($BMAL) | 6.9% | 6.5% | 5.1% | 3.6% | |
| Pg Foils ($PGFOILQ) | 8.7% | 3.7% | 0.7% | 0.4% | |
| |
|---|
| Median (4 companies) | 9.4% | 6.5% | 7.0% | 6.8% | 9.9% |
|---|
| Hindalco Industries ($HINDALCO) | 11.0% | 10.9% | 10.3% | 9.3% | 8.7% |
Top companies by CAPEX/Revenue, %
| Top | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Alicon Castalloy ($ALICON) | 9.8% | 8.4% | 3.7% | 5.2% | 12.0% |
| |
|---|
| Median (1 company) | 8.4% | 5.2% | 3.7% | 5.2% | 12.0% |
|---|
| Hindalco Industries ($HINDALCO) | 11.0% | 15.5% | 14.8% | 10.8% | 5.8% |
Top companies by ROIC, %
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Alicon Castalloy ($ALICON) | | 16.4% | 13.0% | 14.8% | 16.7% |
| Tentiwal Wire Products ($TWPL) | 12.7% | 12.5% | 12.6% | | |
| Sacheta Metals ($SACHEMT) | -2.7% | -3.1% | | | |
| Bothra Metals & Alloys ($BMAL) | 21.4% | 15.2% | 13.8% | | |
| Gujarat Foils ($GUJFOIL) | 9.6% | | | | |
| |
|---|
| Median (6 companies) | 9.6% | 12.5% | 12.8% | 14.8% | 16.7% |
|---|
| Hindalco Industries ($HINDALCO) | 8.7% | 8.6% | 6.2% | 4.6% | 4.9% |
Top companies by Net Debt / EBITDA
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Alicon Castalloy ($ALICON) | 1.9x | 2.3x | 2.1x | 2.0x | 2.3x |
| Sacheta Metals ($SACHEMT) | 12.7x | 14.3x | 0.0x | 0.0x | |
| Tentiwal Wire Products ($TWPL) | 5.8x | 4.9x | 5.2x | 0.0x | |
| Bothra Metals & Alloys ($BMAL) | 2.2x | 4.1x | 3.1x | 0.0x | |
| Gujarat Foils ($GUJFOIL) | 5.0x | | 3.7x | 0.0x | |
| |
|---|
| Median (6 companies) | 4.4x | 4.9x | 3.4x | 0.0x | 2.3x |
|---|
| Hindalco Industries ($HINDALCO) | 3.5x | 4.3x | 6.6x | 7.5x | 7.2x |
