Jayaswal Neco Industries reports 46.9% CAPEX decline and 4.3% Revenue decline
29-05-2015 • About Jayaswal Neco Industries (
$JAYNECOIND) • By InTwits
Jayaswal Neco Industries reported FY2015 financial results today. Overall the company's long term financial model is characterised by the following facts:
- Jayaswal Neco Industries is a company in decline: FY2015 revenue growth was -4.3%, 5 years revenue CAGR was -2.5%
- Jayaswal Neco Industries has high CAPEX intensity: 5 year average CAPEX/Revenue was 28.1%. At the same time it's a lot of higher than industry average of 7.9%.
- CAPEX is quite volatile: 5,222 in FY2015, 9,824 in FY2014, 11,215 in FY2013, 5,286 in FY2012, 6,307 in FY2011
- The company has potentially unprofitable business model: ROIC is at 4.4%
- It operates with medium-size leverage: Net Debt/EBITDA is 11.2x while industry average is 13.7x
Below you can find a comprehensive analysis of the key data driving the company's performance and stock price.
Jayaswal Neco Industries ($JAYNECOIND) key annual financial indicators
| mln. INR | 2011 | 2012 | 2013 | 2014 | 2015 | 2015/2014 |
|---|
P&L
|
|---|
| Revenue | 22,614 | 25,905 | 25,492 | 31,608 | 30,243 | -4.3% |
| EBITDA | 3,566 | 3,497 | 3,186 | 4,031 | 3,593 | -10.9% |
| Net Income | 981 | 538 | 278 | 621 | 3 | -99.5% |
Balance Sheet
|
|---|
| Cash | 187 | 888 | 1,165 | 2,137 | 222 | -89.6% |
| Short Term Debt | 6,902 | 5,714 | 9,574 | 11,931 | 10,697 | -10.3% |
| Long Term Debt | 5,553 | 11,450 | 14,646 | 24,797 | 29,825 | 20.3% |
Cash flow
|
|---|
| Capex | 6,307 | 5,286 | 11,215 | 9,824 | 5,222 | -46.9% |
Ratios
|
|---|
| Revenue growth | -34.1% | 14.6% | -1.6% | 24.0% | -4.3% | |
| EBITDA growth | 22.6% | -1.9% | -8.9% | 26.5% | -10.9% | |
| EBITDA Margin | 15.8% | 13.5% | 12.5% | 12.8% | 11.9% | -0.9% |
| Net Income Margin | 4.3% | 2.1% | 1.1% | 2.0% | 0.0% | -2.0% |
| CAPEX, % of revenue | 27.9% | 20.4% | 44.0% | 31.1% | 17.3% | -13.8% |
| ROIC | 13.8% | 10.1% | 5.9% | 5.5% | 4.4% | -1.1% |
| ROE | 14.7% | 5.5% | 1.8% | 3.2% | 0.0% | -3.2% |
| Net Debt/EBITDA | 3.4x | 4.7x | 7.2x | 8.6x | 11.2x | 2.6x |
Revenue and profitability
The company's Revenue decreased on 4.3% in FY2015. Revenue decline was worsened by EBITDA margin decline. EBITDA Margin decreased slightly on 0.87 pp from 12.8% to 11.9% in FY2015.
Net Income marign decreased slightly on 2.0 pp from 2.0% to 0.0094% in FY2015.
Capital expenditures (CAPEX) and working capital investments
The company's CAPEX/Revenue was 17.3% in FY2015. CAPEX/Revenue decreased on 3.1 pp from 20.4% in FY2012 to 17.3% in FY2015. It's average CAPEX/Revenue for the last three years was 30.8%.Battling declining revenue Jayaswal Neco Industries made large investments to CAPEX (145% of EBITDA) but that didn't help at least in this year.
Return on investment
The company operates at low ROIC (4.43%) and ROE (0.01%). ROIC decreased slightly on 1.1 pp from 5.5% to 4.4% in FY2015. ROE decreased on 3.2 pp from 3.2% to 0.013% in FY2015.
Leverage (Debt)
Debt level is 11.2x Net Debt / EBITDA and 11.3x Debt / EBITDA. Net Debt / EBITDA jumped on 2.6x from 8.6x to 11.2x in FY2015. Debt surged on 10.3% in FY2015 while cash dropped on 89.6% in FY2015.
Valuation
Jayaswal Neco Industries's trades at EV/EBITDA 12.7x and P/E 1,873.8x while industy averages are 10.5x and 26.1x.
Management team
Arbind Jayaswal is a the company's CEO. Arbind Jayaswal has spent 20 years at the company.
Appendix 1: Peers in Iron & Steel/Interm.Products
Below you can find Jayaswal Neco Industries benchmarking vs. other companies in Iron & Steel/Interm.Products 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 |
|---|
| Inducto Steel ($INDCTST) | | | 54.5% | 150.2% | -41.7% |
| Kamdhenu Ispat ($KIL) | -65.5% | 25.7% | 13.7% | 68.3% | |
| Metkore Alloys & Industries ($METKORE) | | 43.7% | -10.9% | 53.4% | -15.7% |
| Tata Metaliks ($TATAMETALI) | | -7.0% | -19.0% | 44.6% | -1.3% |
| Visa Steel ($VISASTEEL) | | 3.3% | -24.1% | 42.0% | -12.0% |
| |
|---|
| Median (31 companies) | -35.9% | 11.9% | 8.8% | 2.8% | 3.4% |
|---|
| Jayaswal Neco Industries ($JAYNECOIND) | | 14.6% | -1.6% | 24.0% | -4.3% |
Top companies by EBITDA margin, %
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Jindal Steel & Power ($JINDALSTEL) | 48.3% | 37.5% | 30.5% | 28.1% | 29.8% |
| Bhushan Steel ($BHUSANSTL) | 29.0% | 31.2% | 32.3% | 28.1% | 20.4% |
| Sarda Energy & Minerals ($SARDAEN) | 15.2% | 16.3% | 21.5% | 21.3% | 21.5% |
| Jsw Steel ($JSWSTEEL) | 20.2% | 17.8% | 17.1% | 17.9% | 17.7% |
| Jai Corp ($JAICORPLTD) | 18.4% | 14.1% | 16.3% | 16.0% | 12.7% |
| |
|---|
| Median (28 companies) | 13.0% | 9.4% | 9.0% | 7.0% | 9.2% |
|---|
| Jayaswal Neco Industries ($JAYNECOIND) | 15.8% | 13.5% | 12.5% | 12.8% | 11.9% |
Top companies by CAPEX/Revenue, %
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Jindal Steel & Power ($JINDALSTEL) | 64.7% | 34.2% | 47.6% | 69.6% | 26.4% |
| Bhushan Steel ($BHUSANSTL) | 81.1% | 47.2% | 44.0% | 50.4% | 16.2% |
| Surana Industries ($SURANAIND) | | 41.3% | 54.8% | 21.5% | |
| Steel Authority Of India ($SAIL) | 25.3% | 20.9% | 20.7% | 19.3% | 16.9% |
| Uttam Galva Steels ($UTTAMSTL) | 8.0% | 11.0% | 8.2% | 18.2% | 5.3% |
| |
|---|
| Median (20 companies) | 11.9% | 7.5% | 10.4% | 6.6% | 5.3% |
|---|
| Jayaswal Neco Industries ($JAYNECOIND) | 27.9% | 20.4% | 44.0% | 31.1% | 17.3% |
Top companies by ROIC, %
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Tata Metaliks ($TATAMETALI) | 3.1% | -23.5% | -3.7% | 19.9% | 57.4% |
| Nova Iron & Steel ($NOVIS) | | | | 15.4% | |
| Kirloskar Ferrous Industries ($KIRLFER) | 20.0% | 19.1% | 16.8% | 12.4% | 14.7% |
| Pennar Industries ($PENIND) | 31.6% | 26.8% | 18.4% | 12.3% | 15.7% |
| Jsw Steel ($JSWSTEEL) | 9.7% | 11.0% | 10.3% | 12.1% | 9.9% |
| |
|---|
| Median (40 companies) | 9.4% | 6.8% | 5.5% | 6.0% | 5.4% |
|---|
| Jayaswal Neco Industries ($JAYNECOIND) | 13.8% | 10.1% | 5.9% | 5.5% | 4.4% |
Top companies by Net Debt / EBITDA
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Jai Balaji Industries ($JAIBALAJI) | 5.5x | | | 89.7x | |
| Visa Steel ($VISASTEEL) | 6.9x | 20.1x | | 24.4x | 187.1x |
| Ismt ($ISMTLTD) | 4.4x | 5.3x | 9.8x | 19.9x | |
| Kic Metaliks ($KAJARIR) | 6.6x | 9.2x | 3.0x | 18.2x | |
| Bhushan Steel ($BHUSANSTL) | 8.1x | 6.3x | 8.6x | 12.9x | 17.7x |
| |
|---|
| Median (29 companies) | 3.8x | 4.2x | 4.3x | 3.2x | 1.7x |
|---|
| Jayaswal Neco Industries ($JAYNECOIND) | 3.4x | 4.7x | 7.2x | 8.6x | 11.2x |
