Rico Auto Industries Net Income jumped on 5,583% in 2015 while EBITDA Margin decreased slightly on 1.2 pp from 10.0% to 8.8%

29-05-2015 • About Rico Auto Industries ($RICOAUTO) • By InTwits

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

Rico Auto Industries is a company in decline: FY2015 revenue growth was -9.0%, 5 years revenue CAGR was -3.3%
Rico Auto Industries has medium CAPEX intensity: 5 year average CAPEX/Revenue was 9.2%. At the same time it's a lot of higher than industry average of 5.6%.
CAPEX is quite volatile: 1,914 in FY2015, 845 in FY2014, 1,639 in FY2013, 871 in FY2012, 1,253 in FY2011
The company has potentially unprofitable business model: ROIC is at 4.8%
It operates with medium-size leverage: Net Debt/EBITDA is 1.5x while industry average is 1.4x

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

Rico Auto Industries ($RICOAUTO) key annual financial indicators

mln. INR	2011	2012	2013	2014	2015	2015/2014
P&L
Revenue	13,150	15,048	15,060	14,801	13,463	-9.0%
EBITDA	1,245	1,322	1,173	1,485	1,183	-20.3%
Net Income	133	225	54	27	1,534	5,582.6%
Balance Sheet
Cash	190	61	107	89	48	-46.4%
Short Term Debt	2,201	2,747	3,356	2,537	985	-61.2%
Long Term Debt	2,552	2,047	1,635	958	877	-8.5%
Cash flow
Capex	1,253	871	1,639	845	1,914	126.5%
Ratios
Revenue growth	-17.2%	14.4%	0.1%	-1.7%	-9.0%
EBITDA growth	57.4%	6.2%	-11.3%	26.6%	-20.3%
EBITDA Margin	9.5%	8.8%	7.8%	10.0%	8.8%	-1.2%
Net Income Margin	1.0%	1.5%	0.4%	0.2%	11.4%	11.2%
CAPEX, % of revenue	9.5%	5.8%	10.9%	5.7%	14.2%	8.5%
ROIC	7.4%	7.2%	3.5%	6.7%	4.8%	-1.9%
ROE	4.2%	6.8%	1.6%	0.8%	38.4%	37.6%
Net Debt/EBITDA	3.7x	3.6x	4.2x	2.3x	1.5x	-0.8x

Revenue and profitability

The company's Revenue decreased on 9.0% in FY2015. Revenue decline was worsened by EBITDA margin decline. EBITDA Margin decreased slightly on 1.2 pp from 10.0% to 8.8% in FY2015.

Net Income marign surged on 11.2 pp from 0.18% to 11.4% in FY2015.

Capital expenditures (CAPEX) and working capital investments

In FY2015 Rico Auto Industries had CAPEX/Revenue of 14.2%. Rico Auto Industries showed CAPEX/Revenue growth of 8.4 pp from 5.8% in FY2012 to 14.2% in FY2015. It's average level of CAPEX/Revenue for the last three years was 10.3%.The company has spent a lot to CAPEX (162% of EBITDA) which didn't stop revenue from falling.

Return on investment

The company operates at good ROE (38.37%) while ROIC is low (4.84%). ROIC decreased slightly on 1.9 pp from 6.7% to 4.8% in FY2015. ROE surged on 37.6 pp from 0.78% to 38.4% in FY2015.

Leverage (Debt)

Company's Net Debt / EBITDA is 1.5x and Debt / EBITDA is 1.6x. Net Debt / EBITDA dropped on 0.8x from 2.3x to 1.5x in FY2015. Debt dropped on 46.7% in FY2015 while cash dropped on 46.4% in FY2015.

Appendix 1: Peers in Auto Parts & Equipment

Below we provide Rico Auto Industries benchmarking against other companies in Auto Parts & Equipment 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
India Nippon Electricals ($INDNIPPON)		13.6%	3.2%	-2.4%	24.8%
Amara Raja Batteries ($AMARAJABAT)		34.3%	25.1%	16.1%	22.6%
Enkei Wheels (India) ($ENKEIWHEL)		16.9%	1.3%	11.7%	21.6%
Ip Rings ($IPRINGLTD)		4.0%	2.4%	-0.1%	19.5%
Exide Industries ($EXIDEIND)		11.5%	19.7%	30.6%	14.8%
Median (31 companies)	-15.5%	17.2%	2.7%	5.0%	8.8%
Rico Auto Industries ($RICOAUTO)		14.4%	0.1%	-1.7%	-9.0%

Top companies by EBITDA margin, %


Top 5	FY2011	FY2012	FY2013	FY2014	FY2015
Tube Investments Of India ($TUBEINVEST)	33.7%	18.4%	24.4%	28.3%	30.0%
Shivam Autotech ($SHIVAMAUTO)	23.2%	24.1%	24.1%	20.6%	18.7%
Amara Raja Batteries ($AMARAJABAT)	15.0%	14.9%	15.7%	14.2%	17.0%
Suprajit Engineering ($SUPRAJIT)	16.5%	16.2%	17.0%	17.2%	16.2%
Amtek Auto ($AMTEKAUTO)		25.1%		20.7%	14.8%
Median (35 companies)	10.9%	11.1%	9.9%	10.8%	10.3%
Rico Auto Industries ($RICOAUTO)	9.5%	8.8%	7.8%	10.0%	8.8%

Top companies by CAPEX/Revenue, %


Top 5	FY2011	FY2012	FY2013	FY2014	FY2015
Amtek Auto ($AMTEKAUTO)		18.9%		27.1%	30.3%
Jbm Auto ($JBMA)	18.1%	9.8%	8.4%		14.4%
Shivam Autotech ($SHIVAMAUTO)	11.6%	11.6%	4.1%	4.9%	12.5%
Amara Raja Batteries ($AMARAJABAT)	2.9%	3.7%	2.5%	10.9%	9.6%
L.G.Balakrishnan & Bros ($LGBBROSLTD)	9.8%	3.5%	6.5%	6.0%	8.9%
Median (24 companies)	7.6%	5.6%	4.5%	4.8%	4.6%
Rico Auto Industries ($RICOAUTO)	9.5%	5.8%	10.9%	5.7%	14.2%

Top companies by ROIC, %


Top 5	FY2011	FY2012	FY2013	FY2014	FY2015
Amara Raja Batteries ($AMARAJABAT)	30.5%	32.1%	34.5%	30.3%	35.4%
Exide Industries ($EXIDEIND)	34.2%	24.2%	24.3%	29.5%	26.9%
Suprajit Engineering ($SUPRAJIT)	32.4%	31.8%	28.0%	26.1%	22.9%
Motherson Sumi Systems ($MOTHERSUMI)	23.7%	13.5%	16.5%	25.0%	24.9%
Munjal Showa ($MUNJALSHOW)	18.8%	29.9%	23.8%	22.5%	24.9%
Median (48 companies)	16.5%	16.4%	12.7%	14.5%	14.5%
Rico Auto Industries ($RICOAUTO)	7.4%	7.2%	3.5%	6.7%	4.8%

Top companies by Net Debt / EBITDA


Top 5	FY2011	FY2012	FY2013	FY2014	FY2015
Tube Investments Of India ($TUBEINVEST)	8.1x	17.6x	17.8x	17.3x	16.4x
Autoline Industries ($AUTOIND)	3.1x	3.2x	4.0x	12.0x
Reil Electricals India ($REILELEC)	-0.1x	-0.0x	1.5x	9.1x	0.0x
Steel Strips Wheels ($SSWL)	4.6x	5.4x	6.3x	6.5x	5.6x
Automotive Stampings & Assemblies ($ASAL)	1.8x	1.1x	3.9x	6.3x
Median (44 companies)	2.1x	1.2x	1.8x	0.7x	1.0x
Rico Auto Industries ($RICOAUTO)	3.7x	3.6x	4.2x	2.3x	1.5x

Rico Auto Industries stock price chart

Rico Auto Industries financials

mln.	FY2010	FY2011	FY2012

Revenue	15,884	13,150	15,048
EBITDA	791.3	1,245	1,322
Net income	-49.100	133.0	224.6
CAPEX	1,228	1,253	870.6
Debt	4,416	4,753	4,794
Cash	137.4	190.4	60.500

About Rico Auto Industries

Rico Auto Industries Limited, an engineering company, manufactures and supplies high precision fully machined aluminum and ferrous components and assemblies to automotive original equipment manufacturers worldwide. The company is involved in the design, development, tooling, casting, machining, and assembly of ferrous and aluminum products. Its products include oil pump assemblies, fuel system parts, lube oil filter heads, exhaust manifolds, turbine housings, center housings, back plates, crank cases and covers, cylinder head covers, oil pans, intake manifold covers, front covers, valve covers, side covers, balance shafts assemblies, gear housings, and main bearing caps, as well as water, air connections, and pressure plates. The company also provides flywheels, timing cases, oil filter adapters, engine brackets, cylinder blocks, cylinder heads, clutch assemblies, automatic transmission bracket assemblies, differential case housings, gear shifts forks, wheel hubs assemblies, brake panel assemblies, brake discs, drums, and steering knuckles. It markets its products to two wheeler, passenger car, and commercial vehicle customers, as well as to system suppliers. Rico Auto Industries Limited was incorporated in 1983 and is based in Gurgaon, India.