Looking for fundamental growth story? Pay attention to Skipper

29-05-2015 • About Skipper ($SKIPPER) • By InTwits

Pay attention to Skipper as a growth stock. It showed noticeble revenue performance in the last years among with attractive profitability and financial model.

Growth story

Skipper showed fast growth in the last financial year. Skipper's revenue surged on 26.0% in FY2015. In addition to revenue Skipper also keeps delivering EBITDA growth. It was 93.3% in FY2015

In the last 3 years Skipper showed fast revenue growth of 21.0% from FY2012 to FY2015 annually. EBITDA surged on 50.6% from FY2012 to FY2015 annually.

Skipper ($SKIPPER) financials for the last 5 years

mln. INR	FY2011	FY2012	FY2013	FY2014	FY2015
Revenue	5,025	7,412	9,003	10,415	13,128
Revenue growth, %		47.5%	21.5%	15.7%	26.0%
SG&A, %
EBITDA	506	631	867	1,115	2,156
EBITDA growth, %		24.6%	37.5%	28.7%	93.3%
EBITDA margin, %	10.1%	8.51%	9.63%	10.7%	16.4%
Net Income	176	99	187	269	892
Net Income margin, %	3.51%	1.33%	2.08%	2.58%	6.79%
CAPEX	681	564	591	327	329
CAPEX/Revenue, %	13.6%	7.61%	6.57%	3.14%	2.50%
Debt	3,505	2,994	3,976	4,395	3,829
Cash	7	86	128	263	561
Net Debt/EBITDA	6.9x	4.6x	4.4x	3.7x	1.5x
ROIC, %	10.6%	10.4%	13.5%	14.7%	27.4%
ROE, %	14.8%	5.8%	11.0%	12.3%	33.3%

Profitability and return on investment

Margin expansion supported EBITDA growth. Skipper showed fast EBITDA margin growth of 5.70 pp from 10.7% to 16.4% in FY2015. In the last 3 years the company showed fast EBITDA margin growth of 7.90 pp from 8.50% in FY2012 to 16.4% in FY2015.

We call Skipper an attractive growth stock as together with the growth it delivers high ROIC at 27.4%. During the last three years it surged - it was 10.4% in FY2012. Average ROIC for the last three years was 18.5%.

Net Income margin surged on 4.20 pp from 2.60% to 6.80% in FY2015. In the longer period Skipper showed fast Net Income margin growth of 5.50 pp from 1.30% in FY2012 to 6.80% in FY2015.

Skipper operates at ROE of 33.3%. It's average level of ROE for the last three years was 18.9%.

Capital expenditures (CAPEX)

In FY2015 Skipper had CAPEX/Revenue of 2.50%. The company's CAPEX/Revenue dropped on 5.11 pp from 7.61% in FY2012 to 2.50% in FY2015. It's average level of CAPEX/Revenue for the last three years was 4.07%.

Leverage (Debt)

Having such a fast growth profile Skipper keeps medium debt level at 1.5x Net Debt/EBITDA. In the longer period Skipper showed big decline in leverage of 3.10x from 4.61x in FY2012 to 1.52x in FY2015.

Valuation vs. comparable companies

The company trades at 9.5x EV/EBITDA which is 31.8% lower than 13.9x Construction & Engineering industry avearge calculated based on 114 companies. The company trades at 19.3x P/E which is 77.8% lower than 87.0x Construction & Engineering industry avearge calculated based on 10 companies.

Peers in Construction & Engineering

Below you can find Skipper benchmarking vs. other companies in Construction & Engineering 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, %

	FY2011	FY2012	FY2013	FY2014	FY2015
Top 5
Madhucon Projects ($MADHUCON)	-72.3%	-19.5%	61.7%	81.2%
C & C Constructions ($CANDC)	7.1%	-11.6%	-12.2%	31.7%
Mbl Infrastructures ($MBLINFRA)	-58.2%	26.3%	7.1%	30.3%
Atlanta ($ATLANTA)	-61.5%	-47.6%	115.1%	28.1%
Arss Infrastructure Projects ($ARSSINFRA)		-5.3%	-34.8%	17.8%	-27.8%
Median (31 companies)	-26.2%	8.7%	6.6%	6.6%	7.1%
Skipper ($SKIPPER)		47.5%	21.5%	15.7%	26.0%

Top companies by EBITDA margin, %

	FY2011	FY2012	FY2013	FY2014	FY2015
Top 5
Jaiprakash Associates ($JPASSOCIAT)	44.0%	36.9%	35.9%	32.4%
Atlanta ($ATLANTA)	44.1%	28.5%	34.6%	30.8%
Shristi Infrastructure Development Corporation ($SHRISTI)	28.0%	27.2%	30.0%	30.0%
Madhucon Projects ($MADHUCON)	11.6%	8.4%	31.9%	22.1%
Arss Infrastructure Projects ($ARSSINFRA)	21.8%	14.0%	13.9%	22.0%	31.3%
Median (29 companies)	12.4%	12.4%	11.3%	10.2%	11.3%
Skipper ($SKIPPER)	10.1%	8.5%	9.6%	10.7%	16.4%

Top companies by CAPEX/Revenue, %

	FY2011	FY2012	FY2013	FY2014	FY2015
Top 5
Madhucon Projects ($MADHUCON)	149.8%	234.5%	155.1%	76.0%
Jaiprakash Associates ($JPASSOCIAT)	114.7%	97.0%	65.5%	45.0%
Supreme Infrastructure India ($SUPREMEINF)	16.7%	46.6%	31.1%	43.1%
Man Infraconstruction ($MANINFRA)	11.5%	7.8%	1.6%	25.0%
Jmc Projects (India) ($JMCPROJECT)	7.8%	4.5%	1.7%	18.9%
Median (23 companies)	5.5%	7.4%	8.6%	6.6%	2.2%
Skipper ($SKIPPER)	13.6%	7.6%	6.6%	3.1%	2.5%

Top companies by ROIC, %

	FY2011	FY2012	FY2013	FY2014	FY2015
Top 5
Mbl Infrastructures ($MBLINFRA)	24.3%	21.3%	13.4%	14.0%
Voltas ($VOLTAS)	32.9%	19.6%	11.7%	11.8%	19.3%
Supreme Infrastructure India ($SUPREMEINF)	15.0%	15.4%	12.4%	10.6%
Reliance Industrial Infrastructure ($RIIL)	5.1%	10.8%	12.7%	10.5%	5.7%
Unity Infraprojects ($UNITY)	15.4%	16.8%	15.0%	9.1%
Median (42 companies)	10.7%	8.6%	7.1%	5.6%	7.0%
Skipper ($SKIPPER)	10.6%	10.4%	13.5%	14.7%	27.4%

Top companies by Net Debt / EBITDA

	FY2011	FY2012	FY2013	FY2014	FY2015
Top 5
Coromandel Engineering Company ($COROENGG)	7.1x		14.4x	54.6x	3.2x
Welspun Projects ($WELPROJ)	71.3x	6.0x	2.6x	20.8x
Punj Lloyd ($PUNJLLOYD)	6.5x	6.7x	6.8x	16.5x
Madhucon Projects ($MADHUCON)	40.1x	96.8x	19.0x	16.4x
Hindustan Construction Co ($HCC)	10.0x	18.8x	20.3x	12.3x	9.3x
Median (32 companies)	3.7x	4.6x	5.7x	6.6x	3.0x
Skipper ($SKIPPER)	6.9x	4.6x	4.4x	3.7x	1.5x

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