Rural Electrification Corporation reports 17.7% revenue growth in FY2015 and 3.4 pp EBITDA Margin decline from 96.7% to 93.3%
28-05-2015 • About Rural Electrification Corporation (
$RECLTD) • By InTwits
Rural Electrification Corporation reported FY2015 financial results today. Overall the company's long term financial model is characterised by the following facts:
- Rural Electrification Corporation has low CAPEX intensity: 5 year average CAPEX/Revenue was 0.1%.
- The company has potentially unprofitable business model: ROIC is at 4.7%
- It operates with high leverage: Net Debt/EBITDA is 8.0x while industry average is 3.1x
Below you can find a comprehensive analysis of the key data driving the company's performance and stock price.
Rural Electrification Corporation ($RECLTD) key annual financial indicators
| mln. INR | 2011 | 2012 | 2013 | 2014 | 2015 | 2015/2014 |
|---|
P&L
|
|---|
| Revenue | 85,322 | 105,128 | 136,576 | 172,436 | 202,945 | 17.7% |
| EBITDA | 82,869 | 102,202 | 132,928 | 166,713 | 189,324 | 13.6% |
| Net Income | 25,849 | 28,387 | 38,328 | 47,413 | 53,444 | 12.7% |
Balance Sheet
|
|---|
| Cash | 28,668 | 53,754 | 15,295 | 12,343 | 6,457 | -47.7% |
| Short Term Debt | 88,667 | 135,045 | 168,363 | 160,779 | 201,787 | 25.5% |
| Long Term Debt | 611,730 | 765,537 | 909,254 | 1,100,953 | 1,311,233 | 19.1% |
Cash flow
|
|---|
| Capex | 13 | 139 | 53 | 48 | 453 | 846.6% |
Ratios
|
|---|
| Revenue growth | -71.7% | 23.2% | 29.9% | 26.3% | 17.7% | |
| EBITDA growth | 26.0% | 23.3% | 30.1% | 25.4% | 13.6% | |
| EBITDA Margin | 97.1% | 97.2% | 97.3% | 96.7% | 93.3% | -3.4% |
| Net Income Margin | 30.3% | 27.0% | 28.1% | 27.5% | 26.3% | -1.2% |
| CAPEX, % of revenue | 0.0% | 0.1% | 0.0% | 0.0% | 0.2% | 0.2% |
| ROIC | | | 4.7% | 5.2% | 4.7% | -0.5% |
| ROE | 21.6% | 20.7% | 23.8% | 24.7% | 23.3% | -1.4% |
| Net Debt/EBITDA | 8.1x | 8.3x | 8.0x | 7.5x | 8.0x | 0.5x |
Revenue and profitability
Rural Electrification Corporation's Revenue jumped on 17.7% in FY2015. Having declining revenue the company managed to increase EBITDA margin. EBITDA Margin increased slightly on 1.6 pp from 9.0% to 10.6% in FY2015.
Net Income marign decreased slightly on 1.2 pp from 27.5% to 26.3% in FY2015.
Capital expenditures (CAPEX) and working capital investments
Rural Electrification Corporation's CAPEX/Revenue was 0.22% in FY2015. Rural Electrification Corporation's CAPEX/Revenue showed almost no change from FY2012 to FY2015. It's average CAPEX/Revenue for the last three years was 0.097%.
Return on investment
The company operates at good ROE (23.30%) while ROIC is low (4.66%). ROIC decreased slightly on 0.53 pp from 5.2% to 4.7% in FY2015. ROE decreased slightly on 1.4 pp from 24.7% to 23.3% in FY2015.
Leverage (Debt)
Debt level is 8.0x Net Debt / EBITDA and 8.0x Debt / EBITDA. Net Debt / EBITDA surged on 0.5x from 7.5x to 8.0x in FY2015. Debt surged on 19.9% in FY2015 while cash dropped on 47.7% in FY2015.
Valuation
The company's trades at EV/EBITDA 9.5x and P/E 5.6x while industy averages are 10.5x and 26.1x.
Appendix 1: Peers in Finance (including NBFCs)
Below you can find Rural Electrification Corporation benchmarking vs. other companies in Finance (including NBFCs) 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 |
|---|
| Advance Powerinfra Tech ($ADVPOWER) | | | | 209.3% | |
| Vishwamitra Financial Services ($VISHWAFIN) | | | 65.2% | 118.5% | |
| Industrial Investment Trust ($IITL) | -88.9% | 119.2% | 72.5% | 76.4% | |
| Sks Microfinance ($SKSMICRO) | | -62.8% | -25.6% | 55.0% | 47.3% |
| Muthoot Capital Services ($MUTHTFN) | | 81.1% | 59.3% | 48.1% | 20.5% |
| |
|---|
| Median (23 companies) | -51.4% | 23.5% | 24.4% | 19.8% | 13.8% |
|---|
| Rural Electrification Corporation ($RECLTD) | | 23.2% | 29.9% | 26.3% | 17.7% |
Top companies by EBITDA margin, %
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Microse India ($MICROSE) | | | | | 101.1% |
| Pnb Gilts ($PNBGILTS) | 91.8% | 94.0% | 96.4% | 96.4% | 96.1% |
| Jsw Holdings ($JSWHL) | | | | | 93.8% |
| Bajaj Holdings & Investment ($BAJAJHLDNG) | 98.7% | 96.2% | 95.5% | 94.4% | 92.7% |
| Saraswati Commercial (India) ($ZSARACOM) | | | | | 92.3% |
| |
|---|
| Median (32 companies) | 68.2% | 64.8% | 65.4% | 65.5% | 62.6% |
|---|
| Rural Electrification Corporation ($RECLTD) | 97.1% | 97.2% | 97.3% | 96.7% | 93.3% |
Top companies by CAPEX/Revenue, %
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Fortune Financial Services (India) ($FORTUNEF) | 5.5% | 1.0% | 1.3% | 4.5% | 7.3% |
| Srei Infrastructure Finance ($SREINFRA) | 34.8% | 29.3% | 8.3% | 12.6% | 5.4% |
| Motilal Oswal Financial Services ($MOTILALOFS) | 10.7% | 15.5% | 5.3% | 1.7% | 3.4% |
| Shriram City Union Finance ($SHRIRAMCIT) | 1.3% | 1.8% | 2.0% | 1.0% | 1.2% |
| Capital Trust ($CAPITALT) | | | | | 1.0% |
| |
|---|
| Median (16 companies) | 1.8% | 1.0% | 0.8% | 1.1% | 0.7% |
|---|
| Rural Electrification Corporation ($RECLTD) | 0.0% | 0.1% | 0.0% | 0.0% | 0.2% |
Top companies by ROIC, %
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Motilal Oswal Financial Services ($MOTILALOFS) | | | 12.0% | 9.7% | 11.9% |
| Shriram City Union Finance ($SHRIRAMCIT) | | 6.1% | 5.8% | 5.8% | 5.7% |
| Mahindra & Mahindra Financial Services ($M&MFIN) | 7.3% | 6.4% | 6.3% | 5.3% | 4.2% |
| IDFC Limited ($IDFC) | 4.8% | 4.8% | 5.0% | 4.3% | 3.4% |
| Sks Microfinance ($SKSMICRO) | | | | 4.1% | 6.6% |
| |
|---|
| Median (52 companies) | 6.0% | 4.1% | 4.4% | 3.8% | 4.1% |
|---|
| Rural Electrification Corporation ($RECLTD) | | | 4.7% | 5.2% | 4.7% |
Top companies by Net Debt / EBITDA
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Pnb Gilts ($PNBGILTS) | 9.0x | 14.2x | 11.2x | 11.3x | 8.8x |
| Fortune Financial Services (India) ($FORTUNEF) | 4.7x | 9.0x | | 10.8x | 8.9x |
| Vibrant Global Capital ($VGCL) | 7.8x | 23.1x | 32.8x | 10.7x | |
| Srei Infrastructure Finance ($SREINFRA) | 6.4x | 7.0x | 6.2x | 7.5x | 8.0x |
| Cholamandalam Investment And Finance Company ($CHOLAFIN) | 9.4x | 9.0x | 7.9x | 7.4x | 7.2x |
| |
|---|
| Median (39 companies) | 2.6x | 4.4x | 3.6x | 2.9x | 2.4x |
|---|
| Rural Electrification Corporation ($RECLTD) | 8.1x | 8.3x | 8.0x | 7.5x | 8.0x |
