Elgi Equipments EBITDA dropped on 11.0% in 2015 and EBITDA Margin decreased slightly on 0.63 pp from 7.4% to 6.7%
29-05-2015 • About Elgi Equipments (
$ELGIEQUIP) • By InTwits
Elgi Equipments reported FY2015 financial results today. Overall the company's long term financial model is characterised by the following facts:
- Elgi Equipments is a company in decline: FY2015 revenue growth was -2.7%, 5 years revenue CAGR was -3.3%
- EBITDA Margin is quite volatile: 6.7% in FY2015, 7.4% in FY2014, 9.0% in FY2013, 11.6% in FY2012, 15.3% in FY2011
- Elgi Equipments has medium CAPEX intensity: 5 year average CAPEX/Revenue was 9.0%. At the same time it's a lot of higher than industry average of 4.6%.
- CAPEX is quite volatile: 568 in FY2015, 1,327 in FY2014, 2,750 in FY2013, 395 in FY2012, 260 in FY2011
- The company has potentially unprofitable business model: ROIC is at 6.0%
- It operates with high leverage: Net Debt/EBITDA is 3.3x while industry average is 0.8x
Below you can find a comprehensive analysis of the key data driving the company's performance and stock price.
Elgi Equipments ($ELGIEQUIP) key annual financial indicators
| mln. INR | 2011 | 2012 | 2013 | 2014 | 2015 | 2015/2014 |
|---|
P&L
|
|---|
| Revenue | 9,410 | 9,917 | 11,445 | 13,504 | 13,143 | -2.7% |
| EBITDA | 1,442 | 1,146 | 1,034 | 994 | 884 | -11.0% |
| Net Income | 891 | 756 | 602 | 455 | 481 | 5.6% |
Balance Sheet
|
|---|
| Cash | 1,393 | 1,456 | 549 | 683 | 779 | 14.0% |
| Short Term Debt | 317 | 91 | 678 | 1,228 | 1,980 | 61.2% |
| Long Term Debt | 0 | 0 | 2,198 | 2,145 | 1,688 | -21.3% |
Cash flow
|
|---|
| Capex | 260 | 395 | 2,750 | 1,327 | 568 | -57.2% |
Ratios
|
|---|
| Revenue growth | -39.4% | 5.4% | 15.4% | 18.0% | -2.7% | |
| EBITDA growth | 31.2% | -20.5% | -9.8% | -3.9% | -11.0% | |
| EBITDA Margin | 15.3% | 11.6% | 9.0% | 7.4% | 6.7% | -0.6% |
| Net Income Margin | 9.5% | 7.6% | 5.3% | 3.4% | 3.7% | 0.3% |
| CAPEX, % of revenue | 2.8% | 4.0% | 24.0% | 9.8% | 4.3% | -5.5% |
| ROIC | 33.6% | 23.4% | 14.1% | 9.2% | 6.0% | -3.1% |
| ROE | 29.6% | 20.5% | 14.5% | 10.2% | 10.1% | -0.1% |
| Net Debt/EBITDA | -0.7x | -1.2x | 2.3x | 2.7x | 3.3x | 0.6x |
Revenue and profitability
Elgi Equipments's Revenue decreased on 2.7% in FY2015. Revenue decline was accompanies by EBITDA margin decline. EBITDA Margin decreased slightly on 0.63 pp from 7.4% to 6.7% in FY2015.
Net Income marign showed almost no change in FY2015.
Capital expenditures (CAPEX) and working capital investments
Elgi Equipments's CAPEX/Revenue was 4.3% in FY2015. The company showed almost no change in CAPEX/Revenue from FY2012 to FY2015. For the last three years the average CAPEX/Revenue was 12.7%.Battling declining revenue Elgi Equipments invested a large share of EBITDA (64.3%) to CAPEX but that didn't help at least in this year.
Return on investment
The company operates at low ROIC (6.05%) and ROE (10.05%). ROIC decreased on 3.1 pp from 9.2% to 6.0% in FY2015. ROE showed almost no change in FY2015.
Leverage (Debt)
Debt level is 3.3x Net Debt / EBITDA and 4.1x Debt / EBITDA. Net Debt / EBITDA surged on 0.6x from 2.7x to 3.3x in FY2015. Debt increased on 8.7% in FY2015 while cash jumped on 14.0% in FY2015.
Valuation
The company's trades at EV/EBITDA 27.0x and P/E 43.7x while industy averages are 10.5x and 26.1x. Elgi Equipments's EV/(EBITDA-CAPEX) is 75.8x with the industry average at 4.7x.
Appendix 1: Peers in Industrial Machinery
Below you can find Elgi Equipments benchmarking vs. other companies in Industrial Machinery 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 |
|---|
| Lloyd Electric & Engineering ($LLOYDELENG) | | 32.2% | 9.9% | 20.5% | 22.3% |
| Kabra Extrusiontechnik ($KABRAEXTRU) | | -13.3% | -8.7% | 28.4% | 21.6% |
| Akar Tools ($AKARTOOL) | | 21.1% | 2.1% | -2.3% | 16.7% |
| Honda Siel Power Products ($HONDAPOWER) | | 28.1% | 2.4% | 5.0% | 16.5% |
| Abc Bearings ($ABCBEARS) | | -13.0% | -15.5% | -6.6% | 15.7% |
| |
|---|
| Median (21 companies) | -7.1% | 20.1% | 2.1% | 0.9% | 3.7% |
|---|
| Elgi Equipments ($ELGIEQUIP) | | 5.4% | 15.4% | 18.0% | -2.7% |
Top companies by Gross margin, %
| Top | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Bell Agromachina ($BELAGRO) | | 0.0% | 0.0% | 0.0% | 0.0% |
| |
|---|
| Median (1 company) | | 0.0% | 0.0% | 0.0% | 0.0% |
|---|
Top companies by EBITDA margin, %
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Texmaco Infrastructure & Holdings ($TEXINFRA) | | | | | 40.5% |
| Dhp India ($DHPIND) | | | | | 26.3% |
| Solitaire Machine Tools ($SOLIMAC) | | | | | 19.4% |
| Wendt (India) ($WENDT) | 30.8% | 28.3% | 21.6% | 18.6% | 19.0% |
| Goldstone Infratech ($GOLDINFRA) | | | | | 18.1% |
| |
|---|
| Median (35 companies) | 13.5% | 10.7% | 9.6% | 10.5% | 10.4% |
|---|
| Elgi Equipments ($ELGIEQUIP) | 15.3% | 11.6% | 9.0% | 7.4% | 6.7% |
Top companies by CAPEX/Revenue, %
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Texmaco Infrastructure & Holdings ($TEXINFRA) | | | | | 14.0% |
| Wendt (India) ($WENDT) | 7.2% | 13.5% | 9.0% | 8.8% | 9.4% |
| Ingersoll-Rand (India) ($INGERRAND) | 1.3% | 4.3% | 10.9% | 3.6% | 9.2% |
| Kabra Extrusiontechnik ($KABRAEXTRU) | 5.4% | 6.5% | 1.8% | 0.5% | 8.8% |
| Forbes & Company ($FORBESCO) | 2.8% | 1.8% | 2.6% | 3.0% | 5.1% |
| |
|---|
| Median (19 companies) | 3.9% | 5.8% | 3.7% | 2.7% | 3.1% |
|---|
| Elgi Equipments ($ELGIEQUIP) | 2.8% | 4.0% | 24.0% | 9.8% | 4.3% |
Top companies by ROIC, %
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Rexnord Electronics & Controls ($REXNORD) | 10.4% | | | 18.8% | |
| Gmm Pfaudler ($GMM) | 14.2% | -76.2% | 6.8% | 17.4% | 18.2% |
| Greaves Cotton ($GREAVESCOT) | | | 24.8% | 16.3% | 26.7% |
| Lakshmi Machine Works ($LAXMIMACH) | 16.8% | 18.0% | 11.7% | 16.2% | 17.6% |
| Wendt (India) ($WENDT) | | 38.2% | 20.2% | 16.2% | 15.1% |
| |
|---|
| Median (51 companies) | 14.6% | 12.6% | 10.2% | 9.7% | 13.0% |
|---|
| Elgi Equipments ($ELGIEQUIP) | 33.6% | 23.4% | 14.1% | 9.2% | 6.0% |
Top companies by Net Debt / EBITDA
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Forbes & Company ($FORBESCO) | 3.5x | 2.2x | 3.3x | 4.7x | 6.3x |
| Nitin Fire Protection Industries ($NITINFIRE) | 2.0x | 3.6x | 3.5x | 3.0x | 3.7x |
| Lloyd Electric & Engineering ($LLOYDELENG) | 4.0x | 3.2x | 3.0x | 3.7x | 3.2x |
| Elecon Engineering Co ($ELECON) | 3.1x | 3.0x | 3.2x | 4.0x | 3.1x |
| Dynamatic Technologies ($DYNAMATECH) | 4.0x | 5.0x | 4.1x | 3.4x | 2.7x |
| |
|---|
| Median (30 companies) | 1.3x | 1.1x | 1.5x | 0.0x | 0.0x |
|---|
| Elgi Equipments ($ELGIEQUIP) | -0.7x | -1.2x | 2.3x | 2.7x | 3.3x |
