Steel Authority Of India reports 23.3% Net Income decline and 1.9% Revenue decline
29-05-2015 • About Steel Authority Of India (
$SAIL) • By InTwits
Steel Authority Of India reported FY2015 financial results today. Overall the company's long term financial model is characterised by the following facts:
- Steel Authority Of India has high CAPEX intensity: 5 year average CAPEX/Revenue was 20.6%. At the same time it's a lot of higher than industry average of 7.9%.
- CAPEX is quite volatile: 17,250 in FY2015, 6,347 in FY2014, 3,884 in FY2013, 6,397 in FY2012, 4,041 in FY2011
- The company has potentially unprofitable business model: ROIC is at 3.9%
Below you can find a comprehensive analysis of the key data driving the company's performance and stock price.
Steel Authority Of India ($SAIL) key annual financial indicators
| mln. INR | 2011 | 2012 | 2013 | 2014 | 2015 | 2015/2014 |
|---|
P&L
|
|---|
| Revenue | 428,486 | 460,069 | 444,773 | 464,677 | 455,908 | -1.9% |
| EBITDA | 78,384 | 64,166 | 49,740 | 41,787 | 48,343 | 15.7% |
| Net Income | 50,139 | 35,935 | 23,291 | 26,521 | 20,353 | -23.3% |
Balance Sheet
|
|---|
| Cash | 7,802 | 7,303 | 6,359 | 4,473 | 5,193 | 16.1% |
| Short Term Debt | 46,533 | 50,069 | 83,839 | 118,875 | 164,311 | 38.2% |
| Long Term Debt | 158,218 | 123,983 | 141,549 | 141,330 | 157,152 | 11.2% |
Cash flow
|
|---|
| Capex | 108,522 | 96,324 | 92,164 | 89,563 | 77,043 | -14.0% |
Ratios
|
|---|
| Revenue growth | 5.6% | 7.4% | -3.3% | 4.5% | -1.9% | |
| EBITDA growth | -21.4% | -18.1% | -22.5% | -16.0% | 15.7% | |
| EBITDA Margin | 18.3% | 13.9% | 11.2% | 9.0% | 10.6% | 1.6% |
| Net Income Margin | 11.7% | 7.8% | 5.2% | 5.7% | 4.5% | -1.2% |
| CAPEX, % of revenue | 25.3% | 20.9% | 20.7% | 19.3% | 16.9% | -2.4% |
| ROIC | 11.0% | 7.9% | 5.5% | 3.6% | 3.9% | 0.3% |
| ROE | 14.1% | 9.2% | 5.7% | 6.2% | 4.7% | -1.6% |
| Net Debt/EBITDA | 2.5x | 2.6x | 4.4x | 6.1x | 6.5x | 0.4x |
Revenue and profitability
Steel Authority Of India's Revenue decreased slightly on 1.9% in FY2015. Revenue decline happened at the same time with EBITDA margin expansion. EBITDA Margin increased slightly on 1.6 pp from 9.0% to 10.6% in FY2015.
Net Income marign decreased slightly on 1.2 pp from 5.7% to 4.5% in FY2015.
Capital expenditures (CAPEX) and working capital investments
In FY2015 Steel Authority Of India had CAPEX/Revenue of 16.9%. Steel Authority Of India's CAPEX/Revenue decreased on 4.0 pp from 20.9% in FY2012 to 16.9% in FY2015. It's average level of CAPEX/Revenue for the last three years was 19.0%.The company has spent a lot to CAPEX (159% of EBITDA) which didn't stop revenue from falling.
Return on investment
The company operates at low ROIC (3.88%) and ROE (4.68%). ROIC showed almost no change in FY2015. ROE decreased slightly on 1.6 pp from 6.2% to 4.7% in FY2015.
Leverage (Debt)
Debt level is 6.5x Net Debt / EBITDA and 6.6x Debt / EBITDA. Net Debt / EBITDA jumped on 0.4x from 6.1x to 6.5x in FY2015. Debt surged on 23.5% in FY2015 while cash jumped on 16.1% in FY2015.
Appendix 1: Peers in Iron & Steel/Interm.Products
Below we provide Steel Authority Of India benchmarking against other companies in Iron & Steel/Interm.Products 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 |
|---|
| 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 ($VISASTEEL) | | 3.3% | -24.1% | 42.0% | -12.0% |
| |
|---|
| Median (31 companies) | -35.9% | 12.5% | 8.8% | 2.8% | 3.4% |
|---|
| Steel Authority Of India ($SAIL) | | 7.4% | -3.3% | 4.5% | -1.9% |
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 ($JAICORPLTD) | 18.4% | 14.1% | 16.3% | 16.0% | 12.7% |
| |
|---|
| Median (28 companies) | 13.0% | 9.4% | 9.0% | 7.0% | 9.2% |
|---|
| Steel Authority Of India ($SAIL) | 18.3% | 13.9% | 11.2% | 9.0% | 10.6% |
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% |
| Jayaswal Neco Industries ($JAYNECOIND) | 27.9% | 20.4% | 44.0% | 31.1% | 17.3% |
| Surana Industries ($SURANAIND) | | 41.3% | 54.8% | 21.5% | |
| Uttam Galva Steels ($UTTAMSTL) | 8.0% | 11.0% | 8.2% | 18.2% | 5.3% |
| |
|---|
| Median (20 companies) | 11.9% | 7.5% | 10.4% | 6.6% | 5.3% |
|---|
| Steel Authority Of India ($SAIL) | 25.3% | 20.9% | 20.7% | 19.3% | 16.9% |
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 ($JSWSTEEL) | 9.7% | 11.0% | 10.3% | 12.1% | 9.9% |
| |
|---|
| Median (40 companies) | 9.4% | 6.8% | 5.7% | 6.0% | 5.4% |
|---|
| Steel Authority Of India ($SAIL) | 11.0% | 7.9% | 5.5% | 3.6% | 3.9% |
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 ($BHUSANSTL) | 8.1x | 6.3x | 8.6x | 12.9x | 17.7x |
| |
|---|
| Median (29 companies) | 3.8x | 4.6x | 4.3x | 3.2x | 1.7x |
|---|
| Steel Authority Of India ($SAIL) | 2.5x | 2.6x | 4.4x | 6.1x | 6.5x |
