Hindustan Copper reports 76.6% Net Income decline and 21.8 pp EBITDA Margin decline from 34.5% to 12.6%
28-05-2015 • About Hindustan Copper (
$HINDCOPPER) • By InTwits
Hindustan Copper reported FY2015 financial results today. Overall the company's long term financial model is characterised by the following facts:
- Hindustan Copper is a company in decline: FY2015 revenue growth was -32.5%, 5 years revenue CAGR was -2.5%
- EBITDA Margin is quite volatile: 12.6% in FY2015, 34.5% in FY2014, 23.9% in FY2013, 36.8% in FY2012, 34.0% in FY2011
- Hindustan Copper has medium CAPEX intensity: 5 year average CAPEX/Revenue was 5.5%. At the same time it's in pair with industry average of 1.6%.
- CAPEX is quite volatile: 1,559 in FY2015, 886 in FY2014, 404 in FY2013, 201 in FY2012, 175 in FY2011
- The company has potentially unprofitable business model: ROIC is at 0.8%
Below you can find a comprehensive analysis of the key data driving the company's performance and stock price.
Hindustan Copper ($HINDCOPPER) key annual financial indicators
| mln. INR | 2011 | 2012 | 2013 | 2014 | 2015 | 2015/2014 |
|---|
P&L
|
|---|
| Revenue | 11,663 | 14,876 | 13,231 | 14,889 | 10,048 | -32.5% |
| EBITDA | 3,963 | 5,469 | 3,158 | 5,130 | 1,271 | -75.2% |
| Net Income | 2,241 | 3,235 | 3,556 | 2,864 | 669 | -76.6% |
Balance Sheet
|
|---|
| Cash | 1,267 | 397 | 133 | 177 | 3,198 | 1,704.1% |
| Short Term Debt | 0 | 0 | 0 | 0 | 0 | |
| Long Term Debt | 0 | 0 | 0 | 0 | 0 | |
Cash flow
|
|---|
| Capex | 175 | 201 | 404 | 886 | 1,559 | 75.9% |
Ratios
|
|---|
| Revenue growth | 2.4% | 27.5% | -11.1% | 12.5% | -32.5% | |
| EBITDA growth | 50.6% | 38.0% | -42.3% | 62.5% | -75.2% | |
| EBITDA Margin | 34.0% | 36.8% | 23.9% | 34.5% | 12.6% | -21.8% |
| Net Income Margin | 19.2% | 21.7% | 26.9% | 19.2% | 6.7% | -12.6% |
| CAPEX, % of revenue | 1.5% | 1.4% | 3.1% | 6.0% | 15.5% | 9.6% |
| ROIC | 25.0% | 31.2% | 10.7% | 19.0% | 0.8% | -18.3% |
| ROE | 19.5% | 25.1% | 23.4% | 16.5% | 3.6% | -12.9% |
| Net Debt/EBITDA | -0.3x | -0.1x | -0.0x | -0.0x | -2.5x | -2.5x |
Revenue and profitability
The company's Revenue dropped on 32.5% in FY2015. Revenue decline was accompanies by EBITDA margin decline. EBITDA Margin dropped on 21.8 pp from 34.5% to 12.6% in FY2015.
Net Income marign dropped on 12.6 pp from 19.2% to 6.7% in FY2015.
Capital expenditures (CAPEX) and working capital investments
The company's CAPEX/Revenue was 15.5% in FY2015. Hindustan Copper's CAPEX/Revenue jumped on 14.2 pp from 1.4% in FY2012 to 15.5% in FY2015. It's average CAPEX/Revenue for the last three years was 8.2%.Battling declining revenue the company made large investments to CAPEX (123% of EBITDA) but that didn't help at least in this year.
Return on investment
The company operates at low ROIC (0.78%) and ROE (3.63%). ROIC dropped on 18.3 pp from 19.0% to 0.78% in FY2015. ROE dropped on 12.9 pp from 16.5% to 3.6% in FY2015.
Leverage (Debt)
The company has no debt. Cash jumped on 1,704% in FY2015.
Valuation
Hindustan Copper's trades at EV/EBITDA 42.9x and P/E 86.3x while industy averages are 10.5x and 26.1x.
Appendix 1: Peers in Copper
Below we provide Hindustan Copper benchmarking against other companies in Copper 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 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Arcotech ($ARCOTECH) | -74.3% | 25.0% | 46.0% | 69.3% | |
| |
|---|
| Median (1 company) | -74.3% | 25.0% | 46.0% | 69.3% | |
|---|
| Hindustan Copper ($HINDCOPPER) | | 27.5% | -11.1% | 12.5% | -32.5% |
Top companies by EBITDA margin, %
| Top | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Arcotech ($ARCOTECH) | 16.4% | 15.2% | 12.9% | 13.6% | |
| |
|---|
| Median (1 company) | 16.4% | 15.2% | 12.9% | 13.6% | |
|---|
| Hindustan Copper ($HINDCOPPER) | 34.0% | 36.8% | 23.9% | 34.5% | 12.6% |
Top companies by CAPEX/Revenue, %
| Top | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Arcotech ($ARCOTECH) | 5.3% | 4.0% | 6.2% | 3.5% | |
| |
|---|
| Median (1 company) | 5.3% | 4.0% | 6.2% | 3.5% | |
|---|
| Hindustan Copper ($HINDCOPPER) | 1.5% | 1.4% | 3.1% | 6.0% | 15.5% |
Top companies by ROIC, %
| Top | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Arcotech ($ARCOTECH) | 30.7% | 25.8% | 21.5% | 25.7% | |
| Baroda Extrusion ($BAROEXT) | 11.8% | 2.9% | | | |
| |
|---|
| Median (2 companies) | 21.2% | 14.4% | 21.5% | 25.7% | |
|---|
| Hindustan Copper ($HINDCOPPER) | 25.0% | 31.2% | 10.7% | 19.0% | 0.8% |
Top companies by Net Debt / EBITDA
| Top | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Arcotech ($ARCOTECH) | 2.0x | 2.0x | 3.0x | 2.5x | |
| |
|---|
| Median (1 company) | 4.8x | 13.3x | 3.0x | 2.5x | |
|---|
| Hindustan Copper ($HINDCOPPER) | -0.3x | -0.1x | -0.0x | -0.0x | -2.5x |
