Larsen & Toubro Debt jumped on 12.2% in 2015 and EBITDA increased on 3.2%
30-05-2015 • About Larsen & Toubro (
$LT) • By InTwits
Larsen & Toubro reported FY2015 financial results today. Overall the company's long term financial model is characterised by the following facts:
- Larsen & Toubro has high CAPEX intensity: 5 year average CAPEX/Revenue was 10.3%. At the same time it's in pair with industry average of 12.8%.
- CAPEX is quite volatile: 633,640 in FY2015, 600,870 in FY2014, 307,260 in FY2013, 163,810 in FY2012, 338,650 in FY2011
- The company has potentially unprofitable business model: ROIC is at 6.8%
- It operates with high leverage: Net Debt/EBITDA is 7.4x while industry average is 4.1x
Below you can find a comprehensive analysis of the key data driving the company's performance and stock price.
Larsen & Toubro ($LT) key annual financial indicators
| mln. INR | 2011 | 2012 | 2013 | 2014 | 2015 | 2015/2014 |
|---|
P&L
|
|---|
| Revenue | 516,139 | 637,314 | 739,979 | 844,936 | 895,897 | 6.0% |
| EBITDA | 78,610 | 93,121 | 102,967 | 110,951 | 114,464 | 3.2% |
| Net Income | 44,562 | 46,937 | 52,057 | 49,020 | 47,648 | -2.8% |
Balance Sheet
|
|---|
| Cash | 36,285 | 33,486 | 35,275 | 40,597 | 57,120 | 40.7% |
| Short Term Debt | 80,512 | 109,578 | 157,520 | 254,006 | 251,608 | -0.9% |
| Long Term Debt | 248,411 | 366,564 | 473,921 | 554,449 | 655,372 | 18.2% |
Cash flow
|
|---|
| Capex | 73,092 | 73,024 | 78,323 | 69,673 | 62,525 | -10.3% |
Ratios
|
|---|
| Revenue growth | 18.6% | 23.5% | 16.1% | 14.2% | 6.0% | |
| EBITDA growth | 22.4% | 18.5% | 10.6% | 7.8% | 3.2% | |
| EBITDA Margin | 15.2% | 14.6% | 13.9% | 13.1% | 12.8% | -0.4% |
| Net Income Margin | 8.6% | 7.4% | 7.0% | 5.8% | 5.3% | -0.5% |
| CAPEX, % of revenue | 14.2% | 11.5% | 10.6% | 8.2% | 7.0% | -1.3% |
| ROIC | 12.3% | 11.1% | 9.6% | 8.6% | 6.8% | -1.9% |
| ROE | 19.4% | 17.2% | 16.5% | 13.7% | 12.1% | -1.6% |
| Net Debt/EBITDA | 3.7x | 4.8x | 5.8x | 6.9x | 7.4x | 0.5x |
Revenue and profitability
Larsen & Toubro's Revenue increased on 6.0% in FY2015. EBITDA Margin showed almost no change in FY2015.
Net Income marign showed almost no change in FY2015.
Capital expenditures (CAPEX) and working capital investments
Larsen & Toubro's CAPEX/Revenue was 7.0% in FY2015. Larsen & Toubro showed decline in CAPEX/Revenue of 4.5 pp from 11.5% in FY2012 to 7.0% in FY2015. It's average level of CAPEX/Revenue for the last three years was 8.6%.Larsen & Toubro maintained rich investment policy and has spent a big chunk of EBITDA (54.6%) to CAPEX.
Return on investment
The company operates at good ROE (12.12%) while ROIC is low (6.79%). ROIC decreased slightly on 1.9 pp from 8.6% to 6.8% in FY2015. ROE decreased slightly on 1.6 pp from 13.7% to 12.1% in FY2015.
Leverage (Debt)
Debt level is 7.4x Net Debt / EBITDA and 7.9x Debt / EBITDA. Net Debt / EBITDA surged on 0.5x from 6.9x to 7.4x in FY2015. Debt surged on 12.2% in FY2015 while cash surged on 40.7% in FY2015.
Appendix 1: Peers in Construction & Engineering
Below we provide Larsen & Toubro benchmarking against other companies in Construction & Engineering 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 |
|---|
| 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 ($MBLINFRA) | | 26.3% | 7.1% | 30.3% | 11.1% |
| Atlanta ($ATLANTA) | | -47.6% | 115.1% | 28.1% | 50.2% |
| Arss Infrastructure Projects ($ARSSINFRA) | | -5.3% | -34.8% | 17.8% | -27.8% |
| |
|---|
| Median (31 companies) | -20.9% | 8.7% | 6.6% | 6.6% | 7.4% |
|---|
| Larsen & Toubro ($LT) | | 23.5% | 16.1% | 14.2% | 6.0% |
Top companies by EBITDA margin, %
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Arss Infrastructure Projects ($ARSSINFRA) | 21.8% | 14.0% | 13.9% | 22.0% | 31.3% |
| Reliance Industrial Infrastructure ($RIIL) | | | | | 30.8% |
| Shristi Infrastructure Development Corporation ($SHRISTI) | 28.0% | 27.2% | 30.0% | 30.0% | 29.8% |
| Atlanta ($ATLANTA) | 44.1% | 28.5% | 34.6% | 30.8% | 21.4% |
| Garnet Construction ($GARNET) | | | | | 20.7% |
| |
|---|
| Median (26 companies) | 12.0% | 11.9% | 11.2% | 10.2% | 10.4% |
|---|
| Larsen & Toubro ($LT) | 15.2% | 14.6% | 13.9% | 13.1% | 12.8% |
Top companies by CAPEX/Revenue, %
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| 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% | 18.6% |
| Jmc Projects (India) ($JMCPROJECT) | 7.8% | 4.5% | 1.7% | 18.9% | 3.2% |
| |
|---|
| Median (23 companies) | 5.5% | 7.3% | 6.6% | 4.0% | 3.1% |
|---|
| Larsen & Toubro ($LT) | 14.2% | 11.5% | 10.6% | 8.2% | 7.0% |
Top companies by ROIC, %
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Skipper ($SKIPPER) | 10.6% | 10.4% | 13.5% | 14.7% | 27.4% |
| Mbl Infrastructures ($MBLINFRA) | 24.3% | 21.3% | 13.4% | 14.0% | 13.6% |
| 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 ($RIIL) | 5.1% | 10.8% | 12.7% | 10.5% | 5.7% |
| |
|---|
| Median (42 companies) | 10.5% | 8.6% | 7.1% | 5.6% | 6.9% |
|---|
| Larsen & Toubro ($LT) | 12.3% | 11.1% | 9.6% | 8.6% | 6.8% |
Top companies by Net Debt / EBITDA
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| 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 ($HCC) | 10.0x | 18.8x | 20.3x | 12.3x | 9.3x |
| |
|---|
| Median (32 companies) | 3.7x | 4.5x | 5.3x | 5.9x | 2.3x |
|---|
| Larsen & Toubro ($LT) | 3.7x | 4.8x | 5.8x | 6.9x | 7.4x |
