Sah Petroleums reports 7.5% EBITDA decline and almost no change in EBITDA Margin of 3.5%

28-05-2015 • About Sah Petroleums ($SAHPETRO) • By InTwits

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

Sah Petroleums has low CAPEX intensity: 5 year average CAPEX/Revenue was 1.2%. At the same time it's a lot of higher than industry average of 1.2%.
CAPEX is quite volatile: 158 in FY2015, 7.6 in FY2014, 9.1 in FY2013, 21.1 in FY2012, 39.7 in FY2011
The company has business model with low profitability: ROIC is at 7.5%

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

Sah Petroleums ($SAHPETRO) key annual financial indicators

mln. INR	2011	2012	2013	2014	2015	2015/2014
P&L
Revenue	3,656	4,801	4,174	4,036	4,073	0.9%
EBITDA	197	273	146	153	142	-7.5%
Net Income	158	1	-13	10	50	382.1%
Balance Sheet
Cash	134	137	111	152	138	-8.7%
Short Term Debt	0		0	1	292	28,710.8%
Long Term Debt	0	0	0	0	109
Cash flow
Capex	40	21	9	8	158	1,982.3%
Ratios
Revenue growth	-24.5%	31.3%	-13.1%	-3.3%	0.9%
EBITDA growth	-332.3%	38.8%	-46.7%	5.1%	-7.5%
EBITDA Margin	5.4%	5.7%	3.5%	3.8%	3.5%	-0.3%
Net Income Margin	4.3%	0.0%	-0.3%	0.3%	1.2%	1.0%
CAPEX, % of revenue	1.1%	0.4%	0.2%	0.2%	3.9%	3.7%
ROIC	10.5%	20.0%	10.0%	10.9%	7.5%	-3.3%
ROE	13.3%	0.0%	-1.0%	0.9%	4.0%	3.1%
Net Debt/EBITDA	-0.7x	-0.5x	-0.8x	-1.0x	1.9x	2.8x

Revenue and profitability

The company's Revenue increased slightly on 0.92% in FY2015. EBITDA Margin showed almost no change in FY2015.

Net Income marign increased slightly on 0.98 pp from 0.26% to 1.2% in FY2015.

Capital expenditures (CAPEX) and working capital investments

The company's CAPEX/Revenue was 3.9% in FY2015. The company's CAPEX/Revenue increased on 3.4 pp from 0.44% in FY2012 to 3.9% in FY2015. For the last three years the average CAPEX/Revenue was 1.4%.The company investments to CAPEX were large: 111% of EBITDA.

Return on investment

The company operates at low ROIC (7.54%) and ROE (3.99%). ROIC decreased on 3.3 pp from 10.9% to 7.5% in FY2015. ROE increased on 3.1 pp from 0.85% to 4.0% in FY2015.

Leverage (Debt)

Debt level is 1.9x Net Debt / EBITDA and 2.8x Debt / EBITDA. Net Debt / EBITDA surged on 2.8x from -1.0x to 1.9x in FY2015. Debt jumped on 39,475% in FY2015 while cash decreased on 8.7% in FY2015.

Valuation

The company's trades at EV/EBITDA 15.0x and P/E 37.0x while industy averages are 10.5x and 26.1x.

Appendix 1: Peers in Oil Marketing & Distribution

Below you can find Sah Petroleums benchmarking vs. other companies in Oil Marketing & Distribution 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
Eastern Gases ($EASTERNGAS)	-65.7%	51.5%	54.1%	8.5%
Indian Oil Corporation ($IOC)	23.5%	31.8%	13.1%	5.8%
Gulf Oil Corporation ($GULFOILCOR)		12.0%	2.3%	3.0%	-70.0%
Median (3 companies)	-21.1%	31.8%	13.1%	5.8%	-70.0%
Sah Petroleums ($SAHPETRO)		31.3%	-13.1%	-3.3%	0.9%

Top companies by EBITDA margin, %


Top	FY2011	FY2012	FY2013	FY2014	FY2015
Indian Oil Corporation ($IOC)	4.8%	5.5%	3.4%	4.3%
Gulf Oil Corporation ($GULFOILCOR)	5.9%	5.5%	1.8%	3.3%	8.2%
Median (2 companies)	4.8%	5.5%	2.9%	3.8%	8.2%
Sah Petroleums ($SAHPETRO)	5.4%	5.7%	3.5%	3.8%	3.5%

Top companies by CAPEX/Revenue, %


Top	FY2011	FY2012	FY2013	FY2014	FY2015
Indian Oil Corporation ($IOC)	4.4%	4.2%	2.8%	4.5%
Gulf Oil Corporation ($GULFOILCOR)	1.0%	0.9%	1.0%	4.1%	1.9%
Median (2 companies)	1.0%	1.9%	1.9%	4.3%	1.9%
Sah Petroleums ($SAHPETRO)	1.1%	0.4%	0.2%	0.2%	3.9%

Top companies by ROIC, %


Top	FY2011	FY2012	FY2013	FY2014	FY2015
Indian Oil Corporation ($IOC)	8.2%	12.7%	6.4%	8.7%
Gulf Oil Corporation ($GULFOILCOR)	6.1%	4.5%	0.2%	0.9%	1.1%
Eastern Gases ($EASTERNGAS)	13.4%	15.4%	15.1%
Median (3 companies)	8.2%	12.7%	6.4%	4.8%	1.1%
Sah Petroleums ($SAHPETRO)	10.5%	20.0%	10.0%	10.9%	7.5%

Top companies by Net Debt / EBITDA


Top	FY2011	FY2012	FY2013	FY2014	FY2015
Gulf Oil Corporation ($GULFOILCOR)	3.0x	4.1x	87.8x	32.5x	41.5x
Indian Oil Corporation ($IOC)	3.8x	3.6x	5.7x	4.4x
Median (2 companies)	3.1x	3.6x	5.7x	18.4x	41.5x
Sah Petroleums ($SAHPETRO)	-0.7x	-0.5x	-0.8x	-1.0x	1.9x

Sah Petroleums stock price chart

Sah Petroleums financials

mln.	FY2010	FY2011	FY2012

Revenue	4,841	3,656	4,801
EBITDA	-84.726	196.8	273.1
Net income	-61.215	158.1	0.587
CAPEX	68.198	39.729	21.093
Debt	953.4	0.000	0.000
Cash	119.9	133.9	137.2

About Sah Petroleums

Sah Petroleums Limited designs, manufactures, and markets industrial and automotive lubricants, and specialties and process oils in India and internationally. The company offers automotive lubricants, including automotive engine oils for engine, gears, and transmissions, as well as other parts of heavy/medium/light commercial vehicles, agricultural tractors, pump sets, outboard motors, marine engines, commercial and passenger cars, and two and three wheelers; automotive gear and transmission oils; and greases and specialties. It also provides industrial lubricants comprising industrial oils and greases, neat oils for metal working products, and industrial specialty oils primarily for the automobile, engineering, steel, cement, sugar, and machining industries. In addition, the company offers rubber process oils and secondary plasticizers; transformer oils; and white oils primarily for use as a mould releasing agent, insulant, defrothing agent, as well as to manufacture antistatic oils, petroleum jellies, and aggarbatties. Its products are used in various industries, including general engineering, rubber, tire, automotive, ball bearing, textile, plastic, paint, cement, sugar mill, cosmetic, adhesive, transformers, etc. The company markets its products under the IPOL brand name primarily through distributors and agents. Sah Petroleums Limited was incorporated in 1983 and is headquartered in Mumbai, India. As of July 31, 2014, Sah Petroleums Limited operates as a subsidiary of Gulf Petrochem PTE. Ltd.