Garware Polyester EBITDA dropped on 14.9% in 2015 while Revenue increased on 6.3%

29-05-2015 • About Garware Polyester ($GARWARPOLY) • By InTwits

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

EBITDA Margin is declining: 6.7% in FY2015 vs. 8.3% in FY2014 vs. 31.8% in FY2011
EBITDA Margin is quite volatile: 6.7% in FY2015, 8.3% in FY2014, 9.1% in FY2013, 11.6% in FY2012, 31.8% in FY2011
Garware Polyester has medium CAPEX intensity: 5 year average CAPEX/Revenue was 6.0%. At the same time it's in pair with industry average of 7.7%.
CAPEX is quite volatile: 292 in FY2015, 856 in FY2014, 614 in FY2013, 251 in FY2012, 483 in FY2011
The company has potentially unprofitable business model: ROIC is at 4.5%
It operates with high leverage: Net Debt/EBITDA is 5.2x while industry average is 3.3x

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

Garware Polyester ($GARWARPOLY) key annual financial indicators

mln. INR	2011	2012	2013	2014	2015	2015/2014
P&L
Revenue	9,014	7,964	7,775	8,432	8,963	6.3%
EBITDA	2,870	928	711	701	597	-14.9%
Net Income	1,915	320	283	103	178	73.1%
Balance Sheet
Cash	151	208	280	690	591	-14.3%
Short Term Debt	1,569	1,960	2,219	2,796	3,073	9.9%
Long Term Debt	220	327	745	731	606	-17.1%
Cash flow
Capex	483	251	614	856	292	-65.9%
Ratios
Revenue growth	-15.1%	-11.6%	-2.4%	8.4%	6.3%
EBITDA growth		-67.7%	-23.4%	-1.4%	-14.9%
EBITDA Margin	31.8%	11.6%	9.1%	8.3%	6.7%	-1.7%
Net Income Margin	21.2%	4.0%	3.6%	1.2%	2.0%	0.8%
CAPEX, % of revenue	5.4%	3.1%	7.9%	10.1%	3.3%	-6.9%
ROIC		7.2%	4.0%	3.9%	4.5%	0.6%
ROE		7.2%	5.7%	1.9%	3.2%	1.3%
Net Debt/EBITDA	0.6x	2.2x	3.8x	4.0x	5.2x	1.1x

Revenue and profitability

Garware Polyester's Revenue increased on 6.3% 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 increased slightly on 0.77 pp from 1.2% to 2.0% in FY2015.

Capital expenditures (CAPEX) and working capital investments

Garware Polyester's CAPEX/Revenue was 3.3% in FY2015. CAPEX/Revenue showed almost no change from FY2012 to FY2015. Average CAPEX/Revenue for the last three years was 7.1%.

Return on investment

The company operates at low ROIC (4.54%) and ROE (3.17%). ROIC increased slightly on 0.61 pp from 3.9% to 4.5% in FY2015. ROE increased slightly on 1.3 pp from 1.9% to 3.2% in FY2015.

Leverage (Debt)

Company's Net Debt / EBITDA is 5.2x and Debt / EBITDA is 6.2x. Net Debt / EBITDA surged on 1.1x from 4.0x to 5.2x in FY2015. Debt increased on 4.3% in FY2015 while cash dropped on 14.3% in FY2015.

Valuation

The company's trades at EV/EBITDA 9.6x and P/E 14.7x while industy averages are 10.5x and 26.1x. The company's EV/(EBITDA-CAPEX) is 18.7x with the industry average at 4.7x.

Appendix 1: Peers in Commodity Chemicals

Below we provide Garware Polyester benchmarking against other companies in Commodity Chemicals 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 5	FY2011	FY2012	FY2013	FY2014	FY2015
Shree Hari Chemicals Export ($SHHARICH)		-2.5%	-78.0%	299.5%	111.6%
Jindal Poly Films ($JINDPOLBBPH)	-66.5%	-17.2%	-6.3%	131.7%
Bodal Chemicals ($BODALCHEM)	-51.3%	5.4%	-12.6%	80.0%
Kanoria Chemicals & Industries ($KANORICHEM)		-40.7%	27.2%	47.9%	-1.9%
Camphor & Allied Products ($CAMPHOR)		-6.7%	7.2%	42.7%	14.8%
Median (35 companies)	-36.2%	19.0%	11.4%	10.7%	4.9%
Garware Polyester ($GARWARPOLY)		-11.6%	-2.4%	8.4%	6.3%

Top companies by EBITDA margin, %


Top 5	FY2011	FY2012	FY2013	FY2014	FY2015
Mysore Petro Chemicals ($MYSORPETRO)					47.1%
Aditya Birla Chemicals (India) ($ABCIL)	33.6%	26.8%	27.1%	23.6%	21.9%
Chemfab Alkalis ($CHEMFALKAL)	19.0%	22.3%	32.9%	24.2%	19.8%
Alkyl Amines Chemicals ($ALKYLAMINE)	13.3%	15.9%	16.0%	19.0%	18.3%
Balaji Amines ($BALAMINES)	18.3%	17.6%	15.5%	14.3%	16.4%
Median (36 companies)	12.1%	10.9%	8.3%	8.6%	6.3%
Garware Polyester ($GARWARPOLY)	31.8%	11.6%	9.1%	8.3%	6.7%

Top companies by CAPEX/Revenue, %


Top 5	FY2011	FY2012	FY2013	FY2014	FY2015
Kanoria Chemicals & Industries ($KANORICHEM)	12.9%	25.1%	6.0%	13.4%	40.3%
Aditya Birla Chemicals (India) ($ABCIL)	5.9%	136.9%	24.2%	30.8%	15.0%
Aarti Industries ($AARTIIND)	4.8%	8.0%	11.2%	11.0%	10.4%
Alkyl Amines Chemicals ($ALKYLAMINE)	8.0%	5.1%	6.6%	5.9%	8.6%
Sukhjit Starch & Chemicals ($SUKHJITS)	9.2%	15.7%	9.4%	5.4%	5.4%
Median (16 companies)	5.9%	5.3%	6.3%	5.4%	3.4%
Garware Polyester ($GARWARPOLY)	5.4%	3.1%	7.9%	10.1%	3.3%

Top companies by ROIC, %


Top 5	FY2011	FY2012	FY2013	FY2014	FY2015
Riddhi Siddhi Gluco Biols ($RIDDHI)	-0.2%	-1.3%	-0.6%	61.1%
Bodal Chemicals ($BODALCHEM)		-1.3%	3.3%	39.0%
Elantas Beck India ($ELANTAS)	17.5%	20.4%	33.9%	31.0%
Alkyl Amines Chemicals ($ALKYLAMINE)	10.3%	16.0%	18.7%	25.0%	23.7%
Aarti Industries ($AARTIIND)	13.1%	15.9%	19.1%	17.2%	17.9%
Median (59 companies)	10.6%	9.2%	9.8%	9.9%	9.8%
Garware Polyester ($GARWARPOLY)		7.2%	4.0%	3.9%	4.5%

Top companies by Net Debt / EBITDA


Top 5	FY2011	FY2012	FY2013	FY2014	FY2015
India Glycols ($INDIAGLYCO)	8.2x	4.8x	3.7x	8.5x	14.2x
Godrej Industries ($GODREJIND)	6.8x	9.9x	5.7x	7.9x	10.7x
Polyplex Corporation ($POLYPLEX)	0.6x	0.9x	6.8x	7.1x
Link Pharma Chem ($LINKPH)	71.1x	3.4x	4.1x	6.2x
Refnol Resins & Chemicals ($REFNOL)			4.1x	5.6x	0.0x
Median (41 companies)	2.5x	2.6x	3.0x	0.8x	1.8x
Garware Polyester ($GARWARPOLY)	0.6x	2.2x	3.8x	4.0x	5.2x

Garware Polyester stock price chart

Garware Polyester financials

mln.	FY2010	FY2011	FY2012

Revenue	10,611	9,014	7,964
EBITDA	0.000	2,870	927.6
Net income	0.000	1,915	319.8
CAPEX	0.000	483.3	250.6
Debt	0.000	1,789	2,287
Cash	0.000	151.0	207.6

About Garware Polyester

Garware Polyester Limited manufactures and sells polyester films in India. The company offers electrical films for electrical and cable insulation, motor insulation, electrical laminates, hermetically sealed compressor motors, and general purpose applications; shrink labels for outer wrapping and labeling PET and glass bottles, cans, and containers; lidding films; and packaging films for packaging, lamination, metalizing, pasteurization, sterilization, and ink and metal adhesion applications. It also offers thermal lamination films for book covers, magazines, posters, catalogues, digital prints, etc.; special films for digital photos, printed papers, luxury packaging, visiting cards, photo-books, paper boards, text books, calendars, posters, luxury documents, cosmetic, perfumes, wines, etc.; and release liners for labels, cast polymer materials, coating acrylic adhesive on the uncoated side, and electronic and pharmaceutical applications, as well as in the production of ceramic capacitors. In addition, the company offers clear films for photo lamination release, reprographics, labels, and photosensitive coating; laser drafting films for CMYK printing and color separation, offset printing, manual drawings, and pen plotter drawings; tracing films for manual and pen plotter applications, mechanical piping drawings/designs, architectural/civil plans, engineering drawings/designs, flow charts, layouts, art works, and maps; and drafting films for tool/component designs, PCB designs, textile tracings/designs, optical profile grinding designs, and mechanical piping drawings/designs etc. Further, it offers specialty films for food packaging, steel lamination, thermal lamination, metalizing, hot stamping foil, and release films. Garware Polyester Limited exports its products to China, Europe, Eastern Europe, the United States, South America, Africa, the Middle East, the Far-East, Australia, New Zealand, etc. The company was founded in 1957 and is based in Mumbai, India.