Pipavav Defence And Offshore Eng Net Debt / EBITDA jumped on 68.5x from 7.0x to 75.5x in 2015 and Debt jumped on 21.5%

30-05-2015 • About Pipavav Defence And Offshore Eng ($PIPAVAVDOC) • By InTwits

Pipavav Defence And Offshore Eng reported FY2015 financial results today. Overall the company's long term financial model is characterised by the following facts:

Pipavav Defence And Offshore Eng is a company in decline: FY2015 revenue growth was -64.0%, 5 years revenue CAGR was -3.4%
EBITDA Margin is quite volatile: 9.5% in FY2015, 30.7% in FY2014, 23.2% in FY2013, 23.9% in FY2012, 22.0% in FY2011
Pipavav Defence And Offshore Eng has high CAPEX intensity: 5 year average CAPEX/Revenue was 56.6%. At the same time it's in pair with industry average of 54.9%.
CAPEX is quite volatile: 9,706 in FY2015, 8,298 in FY2014, 19,756 in FY2013, 5,275 in FY2012, 3,372 in FY2011
The company has unprofitable business model: ROIC is at -1.3%
It operates with high leverage: Net Debt/EBITDA is 75.5x while industry average is 37.5x

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

Pipavav Defence And Offshore Eng ($PIPAVAVDOC) key annual financial indicators

mln. INR	2011	2012	2013	2014	2015	2015/2014
P&L
Revenue	8,599	18,671	25,865	25,337	9,115	-64.0%
EBITDA	1,890	4,461	5,995	7,787	862	-88.9%
Net Income	438	216	311	27	-3,705	-13,711.9%
Balance Sheet
Cash	4,277	2,783	459	463	2,084	349.8%
Short Term Debt	10,859	20,083	27,701	34,306	12,259	-64.3%
Long Term Debt	9,350	10,018	22,038	20,966	54,895	161.8%
Cash flow
Capex	3,372	5,275	19,756	8,298	9,706	17.0%
Ratios
Revenue growth	-20.6%	117.1%	38.5%	-2.0%	-64.0%
EBITDA growth	-21,032.6%	136.1%	34.4%	29.9%	-88.9%
EBITDA Margin	22.0%	23.9%	23.2%	30.7%	9.5%	-21.3%
Net Income Margin	5.1%	1.2%	1.2%	0.1%	-40.7%	-40.8%
CAPEX, % of revenue	39.2%	28.3%	76.4%	32.7%	106.5%	73.7%
ROIC	4.1%	7.6%	7.7%	8.1%	-1.3%	-9.4%
ROE	2.6%	1.2%	1.5%	0.1%	-14.9%	-15.1%
Net Debt/EBITDA	8.4x	6.1x	8.2x	7.0x	75.5x	68.5x

Revenue and profitability

The company's Revenue dropped on 64.0% in FY2015. Having declining revenue the company managed to increase EBITDA margin. EBITDA Margin increased on 3.4 pp from 1.4% to 4.8% in FY2015.

Net Income marign dropped on 40.8 pp from 0.11% to -40.7% in FY2015.

Capital expenditures (CAPEX) and working capital investments

In FY2015 the company had CAPEX/Revenue of 106%. The company's CAPEX/Revenue surged on 78.2 pp from 28.3% in FY2012 to 106% in FY2015. It's average level of CAPEX/Revenue for the last three years was 71.9%.The company has spent a lot to CAPEX (1,126% of EBITDA) which didn't stop revenue from falling.

Return on investment

The company operates at negative ROIC (-1.28%) and ROE (-14.94%). ROIC decreased on 9.4 pp from 8.1% to -1.3% in FY2015. ROE dropped on 15.1 pp from 0.12% to -14.9% in FY2015.

Leverage (Debt)

Debt level is 75.5x Net Debt / EBITDA and 77.9x Debt / EBITDA. Net Debt / EBITDA jumped on 68.5x from 7.0x to 75.5x in FY2015. Debt surged on 21.5% in FY2015 while cash jumped on 350% in FY2015.

Appendix 1: Peers in Defence

Below we provide Pipavav Defence And Offshore Eng benchmarking against other companies in Defence 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	FY2011	FY2012	FY2013	FY2014	FY2015
Bharat Electronics ($BEL)		2.9%	6.2%	3.0%	8.8%
Median (1 company)		2.9%	6.2%	3.0%	8.8%
Pipavav Defence And Offshore Eng ($PIPAVAVDOC)		117.1%	38.5%	-2.0%	-64.0%

Top companies by EBITDA margin, %


Top	FY2011	FY2012	FY2013	FY2014	FY2015
Bharat Electronics ($BEL)	18.0%	11.0%	10.8%	14.8%	17.0%
Median (1 company)	18.0%	11.0%	10.8%	14.8%	17.0%
Pipavav Defence And Offshore Eng ($PIPAVAVDOC)	22.0%	23.9%	23.2%	30.7%	9.5%

Top companies by CAPEX/Revenue, %


Top	FY2011	FY2012	FY2013	FY2014	FY2015
Bharat Electronics ($BEL)	2.6%	4.2%	6.3%	5.9%	3.3%
Median (1 company)	2.6%	4.2%	6.3%	5.9%	3.3%
Pipavav Defence And Offshore Eng ($PIPAVAVDOC)	39.2%	28.3%	76.4%	32.7%	106.5%

Top companies by ROIC, %


Top	FY2011	FY2012	FY2013	FY2014	FY2015
Bharat Electronics ($BEL)	18.4%	9.7%	8.9%	12.0%	13.5%
Median (1 company)	18.4%	9.7%	8.9%	12.0%	13.5%
Pipavav Defence And Offshore Eng ($PIPAVAVDOC)	4.1%	7.6%	7.7%	8.1%	-1.3%

Top companies by Net Debt / EBITDA


Top	FY2011	FY2012	FY2013	FY2014	FY2015
Bharat Electronics ($BEL)	-0.9x	-0.7x	-0.6x	-0.4x	-0.5x
Median (1 company)	-0.9x	-0.7x	-0.6x	-0.4x	-0.5x
Pipavav Defence And Offshore Eng ($PIPAVAVDOC)	8.4x	6.1x	8.2x	7.0x	75.5x

Pipavav Defence And Offshore Eng stock price chart

Pipavav Defence And Offshore Eng financials

mln.	FY2010	FY2011	FY2012

Revenue	10,836	8,599	18,671
EBITDA	-9.029	1,890	4,461
Net income	-481.662	438.2	216.5
CAPEX	580.3	3,372	5,275
Debt	13,294	20,209	30,101
Cash	1,307	4,277	2,783

About Pipavav Defence And Offshore Eng

Pipavav Defence and Offshore Engineering Company Limited operates as an integrated defence, heavy engineering, and hydrocarbon EPC company in India and internationally. The company designs and constructs offshore patrol vessels, landing platform docks, frigates, corvettes, destroyers, research vessels, submarines, and aircraft carriers; and provides turnkey solutions to the onshore and offshore oil and gas sector. It is also is involved in design and process engineering for ships and offshore structures, including stability calculation, hull structural drawings, machineries selection, piping and electrical drawings, structural analysis of marine structures, and production drawings for ships and offshore structures. In addition, the company integrates third party equipment, such as IBS, IPMS, etc., onto various platforms, as well as undertakes repair and maintenance of various ships and rigs. Further, it fabricates, assembles, and erects heavy engineering products; and trades in steel plates, pipes, rolled products, and other steel products. The company was formerly known as Pipavav Shipyard Limited and changed its name to Pipavav Defence and Offshore Engineering Company Limited in June 2011. Pipavav Defence and Offshore Engineering Company Limited was founded in 1997 and is based in Mumbai, India.