Religare Enterprises revenue surged on 21.3% in 2015 while EBITDA Margin decreased slightly on 2.0 pp from 53.8% to 51.8%

29-05-2015 • About Religare Enterprises ($RELIGARE) • By InTwits

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

EBITDA Margin is quite volatile: 51.8% in FY2015, 53.8% in FY2014, 57.6% in FY2013, 43.2% in FY2012, 19.1% in FY2011
Religare Enterprises has low CAPEX intensity: 5 year average CAPEX/Revenue was 2.6%. At the same time it's in pair with industry average of 2.9%.
CAPEX is quite volatile: 380 in FY2015, 379 in FY2014, 440 in FY2013, 595 in FY2012, 2,249 in FY2011
The company has potentially unprofitable business model: ROIC is at 4.1%
It operates with high leverage: Net Debt/EBITDA is 7.2x while industry average is 1.1x

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

Religare Enterprises ($RELIGARE) key annual financial indicators

mln. INR	2011	2012	2013	2014	2015	2015/2014
P&L
Revenue	28,299	31,998	34,579	34,410	41,742	21.3%
EBITDA	5,414	13,817	19,925	18,508	21,628	16.9%
Net Income	-3,005	-2,128	-5,541	-693	1,538
Balance Sheet
Cash	11,330	15,215	13,833	12,315	10,172	-17.4%
Short Term Debt	80,500	80,809	63,658	74,988	78,008	4.0%
Long Term Debt	39,981	61,364	71,363	66,224	86,883	31.2%
Cash flow
Capex	2,249	595	440	379	380	0.3%
Ratios
Revenue growth	-46.6%	13.1%	8.1%	-0.5%	21.3%
EBITDA growth	1.0%	155.2%	44.2%	-7.1%	16.9%
EBITDA Margin	19.1%	43.2%	57.6%	53.8%	51.8%	-2.0%
Net Income Margin	-10.6%	-6.6%	-16.0%	-2.0%	3.7%	5.7%
CAPEX, % of revenue	7.9%	1.9%	1.3%	1.1%	0.9%	-0.2%
ROIC	-2.7%	2.0%	3.4%	2.7%	4.1%	1.4%
ROE	-11.1%	-6.7%	-16.6%	-2.5%	4.3%	6.8%
Net Debt/EBITDA	20.2x	9.2x	6.1x	7.0x	7.2x	0.2x

Revenue and profitability

Religare Enterprises's Revenue jumped on 21.3% in FY2015. Having declining revenue the company managed to increase EBITDA margin. EBITDA Margin increased on 2.7 pp from 12.4% to 15.1% in FY2015.

Net Income marign increased on 5.7 pp from -2.0% to 3.7% in FY2015.

Capital expenditures (CAPEX) and working capital investments

The company's CAPEX/Revenue was 0.91% in FY2015. CAPEX/Revenue decreased slightly on 0.95 pp from 1.9% in FY2012 to 0.91% in FY2015. Average CAPEX/Revenue for the last three years was 1.1%.

Return on investment

The company operates at low ROIC (4.09%) and ROE (4.27%). ROIC increased slightly on 1.4 pp from 2.7% to 4.1% in FY2015. ROE increased on 6.8 pp from -2.5% to 4.3% in FY2015.

Leverage (Debt)

Company's Net Debt / EBITDA is 7.2x and Debt / EBITDA is 7.6x. Net Debt / EBITDA surged on 0.2x from 7.0x to 7.2x in FY2015. Debt surged on 16.8% in FY2015 while cash dropped on 17.4% in FY2015.

Valuation

The company's trades at EV/EBITDA 9.8x and P/E 37.3x while industy averages are 10.5x and 26.1x. The company's EV/(EBITDA-CAPEX) is 10.0x with the industry average at 4.7x.

Appendix 1: Peers in Other Financial Services

Below we provide Religare Enterprises benchmarking against other companies in Other Financial Services 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
Lkp Finance ($LKPFIN)		-35.0%	20.8%	-4.3%	89.8%
Aditya Birla Money ($BIRLAMONEY)		-21.5%	-13.3%	-10.6%	49.0%
Geojit Bnp Paribas Financial Services ($GEOJITBNPP)		-8.6%	2.0%	-12.6%	42.3%
Jm Financial ($JMFINANCIL)		-2.4%	19.3%	-3.4%	39.4%
Capital First ($CAPF)		90.7%	9.9%	31.5%	35.8%
Median (9 companies)	-21.0%	2.5%	9.9%	12.2%	35.8%
Religare Enterprises ($RELIGARE)		13.1%	8.1%	-0.5%	21.3%

Top companies by EBITDA margin, %


Top 5	FY2011	FY2012	FY2013	FY2014	FY2015
Twentyfirst Century Management Services ($21STCENMGM)					91.9%
Frontline Securities ($FRONTSEC)					87.0%
Shardul Securities ($SHARDUL)					84.6%
Wallfort Financial Services ($WALLFORT)					82.5%
Winro Commercial (India) ($WINROC)					73.4%
Median (23 companies)	36.0%	33.5%	36.2%	33.3%	39.9%
Religare Enterprises ($RELIGARE)	19.1%	43.2%	57.6%	53.8%	51.8%

Top companies by CAPEX/Revenue, %


Top 5	FY2011	FY2012	FY2013	FY2014	FY2015
Jm Financial ($JMFINANCIL)	1.0%	0.9%	0.9%	11.2%	16.9%
Geojit Bnp Paribas Financial Services ($GEOJITBNPP)	5.6%	5.7%	7.8%	3.7%	4.8%
Multi Commodity Exchange Of India ($MCX)	8.5%	3.8%	8.8%	1.7%	3.8%
Icra ($ICRA)	2.4%	2.0%	2.1%	13.2%	1.5%
Lkp Finance ($LKPFIN)	1.2%	3.6%	1.6%	3.9%	1.1%
Median (8 companies)	2.1%	3.8%	1.6%	1.8%	1.3%
Religare Enterprises ($RELIGARE)	7.9%	1.9%	1.3%	1.1%	0.9%

Top companies by ROIC, %


Top 5	FY2011	FY2012	FY2013	FY2014	FY2015
Crisil ($CRISIL)	60.1%	62.5%	53.7%	46.4%
Icra ($ICRA)	24.5%	20.7%	17.0%	20.9%	21.1%
Multi Commodity Exchange Of India ($MCX)	21.9%	35.4%	27.2%	9.9%	4.8%
Iris Mediaworks ($IRISMEDIA)		-1.1%	-0.2%	-0.2%
Db (International) Stock Brokers ($DBSTOCKBRO)
Median (34 companies)	23.2%	13.0%	17.0%	15.4%	12.9%
Religare Enterprises ($RELIGARE)	-2.7%	2.0%	3.4%	2.7%	4.1%

Top companies by Net Debt / EBITDA


Top 5	FY2011	FY2012	FY2013	FY2014	FY2015
Capital First ($CAPF)	9.1x	7.5x	9.2x	9.1x	7.7x
Jm Financial ($JMFINANCIL)	6.6x	6.4x	6.4x	4.8x	4.8x
Intec Capital ($INTECCAP)		5.1x	4.9x	4.6x	4.5x
Indiabulls Securities ($IBSEC)	1.6x	1.6x	2.5x	1.9x	4.0x
Lkp Finance ($LKPFIN)	2.2x	6.9x	5.8x	4.5x	3.5x
Median (21 companies)	-0.0x	-0.1x	0.7x	0.0x	0.0x
Religare Enterprises ($RELIGARE)	20.2x	9.2x	6.1x	7.0x	7.2x

Religare Enterprises stock price chart

Religare Enterprises financials

mln.	FY2010	FY2011	FY2012

Revenue	53,025	28,299	31,998
EBITDA	5,358	5,414	13,817
Net income	969.2	-3,005.200	-2,127.650
CAPEX	1,720	2,249	595.2
Debt	58,921	120,482	142,173
Cash	2,517	11,330	15,215

About Religare Enterprises

Religare Enterprises Limited operates as a diversified financial services company worldwide. The company offers broking services, such as equity broking in cash and derivatives, and depository participant services; currency futures and options broking; commodity broking; institutional brokerage and research services to asset management companies, pension funds, insurance companies, and hedge funds; and commodity trading in physical form, as well as by way of exchange-traded contracts. It also provides various forms of credit to small and medium enterprises, including loans against property, home loans, commercial vehicle and construction equipment loans, and working capital loans, as well as capital markets financing comprising loans against securities, initial public offering financing, employee stock option scheme financing, and promoter financing. In addition, the company offers investment banking services in the areas of mergers and acquisitions advisory services, corporate restructuring advisory services, public equity offerings, convertible bond offerings, institutional placements and private placements, corporate finance, and investment banking advisory services to businesses, private equity firms, other financial institutions, and high net worth individuals. Further, it provides wealth management services, including investment solutions and services, such as mutual funds, fixed income, direct equities and commodities, portfolio management, loans, real estate, insurance, and trust and estate planning services. Additionally the company offers fund-of-fund investment solutions; direct investment funds; asset management services; and health insurance services to individuals and their families, small to medium enterprises, and corporates. The company was incorporated in 1984 and is headquartered in New Delhi, India.