Hbl Power Systems EBITDA surged on 33.0% in 2015 and EBITDA Margin increased on 2.3 pp from 8.1% to 10.4%

29-05-2015 • About Hbl Power Systems ($HBLPOWER) • By InTwits

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

Hbl Power Systems has high CAPEX intensity: 5 year average CAPEX/Revenue was 11.0%. At the same time it's a lot of higher than industry average of 7.8%.
CAPEX is quite volatile: 284 in FY2015, 174 in FY2014, 665 in FY2013, 939 in FY2012, 5,039 in FY2011
The company has potentially unprofitable business model: ROIC is at 6.7%
It operates with high leverage: Net Debt/EBITDA is 4.7x while industry average is 2.9x

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

Hbl Power Systems ($HBLPOWER) key annual financial indicators

mln. INR	2011	2012	2013	2014	2015	2015/2014
P&L
Revenue	12,054	15,644	17,103	13,075	13,503	3.3%
EBITDA	863	2,168	2,295	1,053	1,400	33.0%
Net Income	169	185	234	396	142	-64.1%
Balance Sheet
Cash	787	313	241	227	225	-0.8%
Short Term Debt	4,069	5,278	6,120	5,071	4,850	-4.4%
Long Term Debt	4,174	3,917	4,169	2,270	2,015	-11.3%
Cash flow
Capex	5,039	939	665	174	284	63.2%
Ratios
Revenue growth	-24.6%	29.8%	9.3%	-23.6%	3.3%
EBITDA growth	-58.4%	151.2%	5.9%	-54.1%	33.0%
EBITDA Margin	7.2%	13.9%	13.4%	8.1%	10.4%	2.3%
Net Income Margin	1.4%	1.2%	1.4%	3.0%	1.1%	-2.0%
CAPEX, % of revenue	41.8%	6.0%	3.9%	1.3%	2.1%	0.8%
ROIC	3.8%	10.6%	10.1%	4.3%	6.7%	2.4%
ROE	3.1%	3.4%	4.4%	7.2%	2.5%	-4.6%
Net Debt/EBITDA	8.6x	4.1x	4.4x	6.8x	4.7x	-2.0x

Revenue and profitability

The company's Revenue increased on 3.3% in FY2015. Revenue growth happened at the same time with EBITDA margin expansion. EBITDA Margin increased on 2.3 pp from 8.1% to 10.4% in FY2015.

Net Income marign decreased slightly on 2.0 pp from 3.0% to 1.1% in FY2015.

Capital expenditures (CAPEX) and working capital investments

Hbl Power Systems's CAPEX/Revenue was 2.1% in FY2015. The company's CAPEX/Revenue decreased on 3.9 pp from 6.0% in FY2012 to 2.1% in FY2015. For the last three years the average CAPEX/Revenue was 2.4%.

Return on investment

The company operates at low ROIC (6.72%) and ROE (2.52%). ROIC increased on 2.4 pp from 4.3% to 6.7% in FY2015. ROE decreased on 4.6 pp from 7.2% to 2.5% in FY2015.

Leverage (Debt)

Debt level is 4.7x Net Debt / EBITDA and 4.9x Debt / EBITDA. Net Debt / EBITDA dropped on 2.0x from 6.8x to 4.7x in FY2015. Debt decreased on 6.5% in FY2015 while cash decreased slightly on 0.83% in FY2015.

Valuation

The company's trades at EV/EBITDA 14.8x and P/E 98.7x while industy averages are 10.5x and 26.1x. Hbl Power Systems's EV/(EBITDA-CAPEX) is 18.5x with the industry average at 4.7x.

Appendix 1: Peers in Other Elect.Equip./ Prod.

Below you can find Hbl Power Systems benchmarking vs. other companies in Other Elect.Equip./ Prod. 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
Birla Ericsson Optical ($BIRLAERIC)		13.1%	64.8%	134.7%	-11.3%
Diamond Power Infrastructure ($DIAPOWER)	-52.4%	32.7%	27.9%	23.1%
Genus Power Infrastructures ($GENUSPOWER)		-1.2%	-7.5%	17.4%	19.5%
Ultracab (India) ($ULTRACAB)	49.2%	43.1%	26.2%	10.5%
Salzer Electronics ($SALZER)		23.4%	2.6%	6.9%	15.9%
Median (13 companies)	-6.1%	13.1%	-3.1%	0.4%	17.7%
Hbl Power Systems ($HBLPOWER)		29.8%	9.3%	-23.6%	3.3%

Top companies by Gross margin, %


Top	FY2011	FY2012	FY2013	FY2014	FY2015
Malvica Engineering ($MALVICAE)		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
Indosolar ($INDOSOLAR)	5.8%	-114.4%	-52.7%	-140.0%	16.3%
Genus Power Infrastructures ($GENUSPOWER)	14.4%	14.1%	11.0%	13.8%	13.8%
Salzer Electronics ($SALZER)	14.3%	12.9%	12.5%	12.4%	12.6%
Pitti Laminations ($PITTILAM)	12.9%	15.6%	13.6%	13.2%	12.0%
Birla Ericsson Optical ($BIRLAERIC)	-3.3%	2.6%	9.0%	12.3%	11.3%
Median (9 companies)	9.1%	9.9%	8.9%	9.8%	11.3%
Hbl Power Systems ($HBLPOWER)	7.2%	13.9%	13.4%	8.1%	10.4%

Top companies by CAPEX/Revenue, %


Top 5	FY2011	FY2012	FY2013	FY2014	FY2015
Indosolar ($INDOSOLAR)	24.2%	311.2%	148.3%	42.3%	26.9%
Easun Reyrolle ($EASUNREYRL)	19.3%	26.5%	30.7%	19.4%
Diamond Power Infrastructure ($DIAPOWER)			6.8%	8.4%
Salzer Electronics ($SALZER)	5.7%	6.8%	5.6%	4.1%	8.2%
Birla Ericsson Optical ($BIRLAERIC)	9.4%	1.3%	4.4%	4.0%	3.5%
Median (7 companies)	5.6%	3.1%	5.0%	4.1%	5.8%
Hbl Power Systems ($HBLPOWER)	41.8%	6.0%	3.9%	1.3%	2.1%

Top companies by ROIC, %


Top 5	FY2011	FY2012	FY2013	FY2014	FY2015
Birla Ericsson Optical ($BIRLAERIC)	-6.6%	-2.2%	8.2%	27.3%	16.6%
Ultracab (India) ($ULTRACAB)	14.3%	14.8%	11.6%	18.4%
Salzer Electronics ($SALZER)	14.6%	14.6%	12.7%	13.0%	14.6%
Genus Power Infrastructures ($GENUSPOWER)	15.2%	12.4%	8.0%	12.2%	13.5%
Diamond Power Infrastructure ($DIAPOWER)	19.6%	16.1%	11.7%	11.3%
Median (22 companies)	13.7%	7.7%	8.2%	11.3%	13.5%
Hbl Power Systems ($HBLPOWER)	3.8%	10.6%	10.1%	4.3%	6.7%

Top companies by Net Debt / EBITDA


Top 5	FY2011	FY2012	FY2013	FY2014	FY2015
Easun Reyrolle ($EASUNREYRL)	11.1x	19.4x	11.3x	11.6x	0.0x
Diamond Power Infrastructure ($DIAPOWER)	2.5x	3.3x	5.2x	4.8x
Ultracab (India) ($ULTRACAB)	4.8x	4.9x	5.2x	3.8x
Pitti Laminations ($PITTILAM)	2.9x	2.4x	3.3x	3.2x	0.0x
Genus Power Infrastructures ($GENUSPOWER)	2.8x	3.2x	3.9x	2.9x	2.7x
Median (11 companies)	2.9x	3.3x	3.9x	2.6x	1.6x
Hbl Power Systems ($HBLPOWER)	8.6x	4.1x	4.4x	6.8x	4.7x

Hbl Power Systems stock price chart

Hbl Power Systems financials

mln.	FY2010	FY2011	FY2012

Revenue	15,992	12,054	15,644
EBITDA	2,074	863.1	2,168
Net income	995.9	168.6	185.4
CAPEX	1,017	5,039	939.2
Debt	4,167	8,243	9,195
Cash	342.8	787.3	313.0

About Hbl Power Systems

HBL Power Systems Limited manufactures and sells various specialized batteries in India, the United States, Europe, and the Middle East. The company offers nickel-cadmium batteries comprising fiber plate batteries; pocket plate batteries, such as vented, value regulated, and valve regulated pocket plates; and sintered plate batteries, as well as lead batteries, silver zinc batteries, and training simulators. It also provides advance product batteries, including silver zinc aircraft, missile, and torpedo batteries; thermal batteries; and reserve batteries. In addition, the company offers various engineering solutions to railways, such as data loggers, audio frequency track circuits, electronic interlocking systems, train collision avoidance systems, train management systems, SPAD alert systems, digital axle counters, projects systems, and rail system units; to solar mill manufacturing and air conditioning units; and to defense projects. It serves aviation, defense, railway, telecom, oil and gas, power utilities, UPS and inverter batteries, and solar power industries. The company was founded in 1977 and is headquartered in Hyderabad, India. HBL Power Systems Limited is a subsidiary of Beaver Engineering & Holdings Private Limited.