Fiem Industries reports 23.8% CAPEX growth and 14.5% Revenue growth

29-05-2015 • About Fiem Industries ($FIEMIND) • By InTwits

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

• Fiem Industries has high CAPEX intensity: 5 year average CAPEX/Revenue was 10.5%. At the same time it's a lot of higher than industry average of 5.6%.
• CAPEX is quite volatile: 590 in FY2015, 477 in FY2014, 282 in FY2013, 666 in FY2012, 902 in FY2011
• The company has highly profitable business model: ROIC is at 20.2%
• It operates with medium-size leverage: Net Debt/EBITDA is 1.1x while industry average is 1.4x

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

Fiem Industries ($FIEMIND) key annual financial indicators

mln. INR	2011	2012	2013	2014	2015	2015/2014
P&L
Revenue	4,248	5,320	6,031	7,162	8,201	14.5%
EBITDA	410	727	737	886	1,030	16.3%
Net Income	111	211	277	373	425	14.0%
Balance Sheet
Cash	44	17	16	18	16	-7.2%
Short Term Debt	500	677	580	611	657	7.4%
Long Term Debt	807	950	762	580	515	-11.2%
Cash flow
Capex	902	666	282	477	590	23.8%
Ratios
Revenue growth	-54.4%	25.2%	13.4%	18.7%	14.5%
EBITDA growth	32.9%	77.4%	1.3%	20.2%	16.3%
EBITDA Margin	9.7%	13.7%	12.2%	12.4%	12.6%	0.2%
Net Income Margin	2.6%	4.0%	4.6%	5.2%	5.2%	-0.0%
CAPEX, % of revenue	21.2%	12.5%	4.7%	6.7%	7.2%	0.5%
ROIC	12.4%	18.7%	16.9%	19.9%	20.2%	0.3%
ROE	9.4%	15.7%	17.8%	20.4%	20.0%	-0.4%
Net Debt/EBITDA	3.1x	2.2x	1.8x	1.3x	1.1x	-0.2x

Revenue and profitability

Fiem Industries's Revenue surged on 14.5% in FY2015. Having declining revenue the company managed to increase EBITDA margin. EBITDA Margin increased on 3.4 pp from 1.4% to 4.8% in FY2015.

Net Income marign showed almost no change in FY2015.

Capital expenditures (CAPEX) and working capital investments

In FY2015 Fiem Industries had CAPEX/Revenue of 7.2%. Fiem Industries showed decline in CAPEX/Revenue of 5.3 pp from 12.5% in FY2012 to 7.2% in FY2015. For the last three years the average CAPEX/Revenue was 6.2%.To fuel this fast growth the company invested a large share of EBITDA (57.3%) to CAPEX.

Return on investment

The company operates at high and attractive ROIC (20.18%) and ROE (20.03%). ROIC showed almost no change in FY2015. ROE showed almost no change in FY2015.

Leverage (Debt)

Debt level is 1.1x Net Debt / EBITDA and 1.1x Debt / EBITDA. Net Debt / EBITDA dropped on 0.2x from 1.3x to 1.1x in FY2015. Debt decreased slightly on 1.6% in FY2015 while cash decreased on 7.2% in FY2015.

Valuation

The company's trades at EV/EBITDA 7.5x and P/E 15.4x while industy averages are 10.5x and 26.1x. The company's EV/(EBITDA-CAPEX) is 17.5x with the industry average at 4.7x.

Appendix 1: Peers in Auto Parts & Equipment

Below you can find Fiem Industries benchmarking vs. other companies in Auto Parts & Equipment 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
India Nippon Electricals ($INDNIPPON)		13.6%	3.2%	-2.4%	24.8%
Amara Raja Batteries ($AMARAJABAT)		34.3%	25.1%	16.1%	22.6%
Enkei Wheels (India) ($ENKEIWHEL)		16.9%	1.3%	11.7%	21.6%
Ip Rings ($IPRINGLTD)		4.0%	2.4%	-0.1%	19.5%
Exide Industries ($EXIDEIND)		11.5%	19.7%	30.6%	14.8%
Median (31 companies)	-15.5%	16.9%	2.4%	4.9%	8.6%
Fiem Industries ($FIEMIND)		25.2%	13.4%	18.7%	14.5%

Top companies by EBITDA margin, %

Top 5	FY2011	FY2012	FY2013	FY2014	FY2015
Tube Investments Of India ($TUBEINVEST)	33.7%	18.4%	24.4%	28.3%	30.0%
Shivam Autotech ($SHIVAMAUTO)	23.2%	24.1%	24.1%	20.6%	18.7%
Amara Raja Batteries ($AMARAJABAT)	15.0%	14.9%	15.7%	14.2%	17.0%
Suprajit Engineering ($SUPRAJIT)	16.5%	16.2%	17.0%	17.2%	16.2%
Amtek Auto ($AMTEKAUTO)		25.1%		20.7%	14.8%
Median (35 companies)	10.9%	10.8%	9.8%	10.1%	10.3%
Fiem Industries ($FIEMIND)	9.7%	13.7%	12.2%	12.4%	12.6%

Top companies by CAPEX/Revenue, %

Top 5	FY2011	FY2012	FY2013	FY2014	FY2015
Amtek Auto ($AMTEKAUTO)		18.9%		27.1%	30.3%
Jbm Auto ($JBMA)	18.1%	9.8%	8.4%		14.4%
Rico Auto Industries ($RICOAUTO)	9.5%	5.8%	10.9%	5.7%	14.2%
Shivam Autotech ($SHIVAMAUTO)	11.6%	11.6%	4.1%	4.9%	12.5%
Amara Raja Batteries ($AMARAJABAT)	2.9%	3.7%	2.5%	10.9%	9.6%
Median (24 companies)	7.6%	5.6%	4.5%	4.8%	4.6%
Fiem Industries ($FIEMIND)	21.2%	12.5%	4.7%	6.7%	7.2%

Top companies by ROIC, %

Top 5	FY2011	FY2012	FY2013	FY2014	FY2015
Amara Raja Batteries ($AMARAJABAT)	30.5%	32.1%	34.5%	30.3%	35.4%
Exide Industries ($EXIDEIND)	34.2%	24.2%	24.3%	29.5%	26.9%
Suprajit Engineering ($SUPRAJIT)	32.4%	31.8%	28.0%	26.1%	22.9%
Motherson Sumi Systems ($MOTHERSUMI)	23.7%	13.5%	16.5%	25.0%	24.9%
Munjal Showa ($MUNJALSHOW)	18.8%	29.9%	23.8%	22.5%	24.9%
Median (48 companies)	16.5%	15.7%	11.8%	12.7%	13.4%
Fiem Industries ($FIEMIND)	12.4%	18.7%	16.9%	19.9%	20.2%

Top companies by Net Debt / EBITDA

Top 5	FY2011	FY2012	FY2013	FY2014	FY2015
Tube Investments Of India ($TUBEINVEST)	8.1x	17.6x	17.8x	17.3x	16.4x
Autoline Industries ($AUTOIND)	3.1x	3.2x	4.0x	12.0x
Reil Electricals India ($REILELEC)	-0.1x	-0.0x	1.5x	9.1x	0.0x
Steel Strips Wheels ($SSWL)	4.6x	5.4x	6.3x	6.5x	5.6x
Automotive Stampings & Assemblies ($ASAL)	1.8x	1.1x	3.9x	6.3x
Median (44 companies)	2.1x	1.2x	2.2x	0.7x	1.0x
Fiem Industries ($FIEMIND)	3.1x	2.2x	1.8x	1.3x	1.1x

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