Tilaknagar Industries Net Income dropped on 169% in 2015 and EBITDA Margin decreased on 6.0 pp from 21.0% to 15.0%

30-05-2015 • About Tilaknagar Industries ($TI) • By InTwits

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

• Tilaknagar Industries is a company in decline: FY2015 revenue growth was -22.2%, 5 years revenue CAGR was -3.7%
• EBITDA Margin is declining: 15.0% in FY2015 vs. 21.0% in FY2014 vs. 24.6% in FY2011
• Tilaknagar Industries has high CAPEX intensity: 5 year average CAPEX/Revenue was 16.6%. At the same time it's a lot of higher than industry average of 6.0%.
• CAPEX is quite volatile: 271 in FY2015, 201 in FY2014, 414 in FY2013, 335 in FY2012, 167 in FY2011
• The company has potentially unprofitable business model: ROIC is at 4.6%
• It operates with high leverage: Net Debt/EBITDA is 8.4x while industry average is 2.2x

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

Tilaknagar Industries ($TI) key annual financial indicators

mln. INR	2011	2012	2013	2014	2015	2015/2014
P&L
Revenue	4,683	5,478	7,375	8,069	6,277	-22.2%
EBITDA	1,152	1,434	1,673	1,697	943	-44.4%
Net Income	396	430	560	583	-402	-168.9%
Balance Sheet
Cash	166	195	233	185	332	79.7%
Short Term Debt	3,367	4,071	4,511	6,062	6,138	1.3%
Long Term Debt	991	2,291	2,112	2,256	2,112	-6.4%
Cash flow
Capex	1,111	1,131	739	1,191	859	-27.9%
Ratios
Revenue growth	-38.1%	17.0%	34.6%	9.4%	-22.2%
EBITDA growth	39.2%	24.4%	16.7%	1.4%	-44.4%
EBITDA Margin	24.6%	26.2%	22.7%	21.0%	15.0%	-6.0%
Net Income Margin	8.5%	7.8%	7.6%	7.2%	-6.4%	-13.6%
CAPEX, % of revenue	23.7%	20.6%	10.0%	14.8%	13.7%	-1.1%
ROIC	13.3%	11.6%	11.7%	10.7%	4.6%	-6.1%
ROE	13.0%	9.0%	10.4%	10.5%	-7.1%	-17.6%
Net Debt/EBITDA	3.6x	4.3x	3.8x	4.8x	8.4x	3.6x

Revenue and profitability

Tilaknagar Industries's Revenue dropped on 22.2% in FY2015. Having declining revenue the company managed to increase EBITDA margin. EBITDA Margin increased on 9.4 pp from 22.0% to 31.3% in FY2015.

Net Income marign dropped on 13.6 pp from 7.2% to -6.4% in FY2015.

Capital expenditures (CAPEX) and working capital investments

Tilaknagar Industries's CAPEX/Revenue was 13.7% in FY2015. The company's CAPEX/Revenue decreased on 6.9 pp from 20.6% in FY2012 to 13.7% in FY2015. It's average CAPEX/Revenue for the last three years was 12.8%.Battling declining revenue Tilaknagar Industries invested a large share of EBITDA (91.1%) to CAPEX but that didn't help at least in this year.

Return on investment

The company operates at low but positive ROIC (4.59%) and negative ROE (-7.14%). ROIC decreased on 6.1 pp from 10.7% to 4.6% in FY2015. ROE dropped on 17.6 pp from 10.5% to -7.1% in FY2015.

Leverage (Debt)

Company's Net Debt / EBITDA is 8.4x and Debt / EBITDA is 8.7x. Net Debt / EBITDA surged on 3.6x from 4.8x to 8.4x in FY2015. Debt decreased slightly on 0.82% in FY2015 while cash jumped on 79.7% in FY2015.

Appendix 1: Peers in Breweries & Distilleries

Below we provide Tilaknagar Industries benchmarking against other companies in Breweries & Distilleries 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
Khoday India ($KHODAY)	-25.0%	19.9%	-24.7%	34.3%
Pioneer Distilleries ($PIONDIST)		94.2%	-0.9%	25.1%	17.0%
United Breweries ($UBL)		16.3%	9.5%	8.5%	10.8%
Ifb Agro Industries ($IFBAGRO)		-4.8%	5.4%	8.4%	19.2%
United Spirits ($UNITDSPR)		24.5%	13.3%	0.9%	-12.8%
Median (7 companies)	-26.6%	16.3%	5.4%	8.4%	10.8%
Tilaknagar Industries ($TI)		17.0%	34.6%	9.4%	-22.2%

Top companies by EBITDA margin, %

Top 5	FY2011	FY2012	FY2013	FY2014	FY2015
Pioneer Distilleries ($PIONDIST)	-36.1%	-3.0%	-7.5%	6.6%	19.5%
United Breweries ($UBL)	12.8%	11.6%	12.3%	10.3%	13.3%
G.M.Breweries ($GMBREW)	15.5%	10.0%	9.1%	13.7%	11.5%
United Spirits ($UNITDSPR)	15.5%	12.2%	12.6%	-1.3%	6.1%
Ifb Agro Industries ($IFBAGRO)	7.8%	11.5%	10.8%	9.2%	5.1%
Median (6 companies)	12.8%	11.6%	10.8%	10.3%	8.8%
Tilaknagar Industries ($TI)	24.6%	26.2%	22.7%	21.0%	15.0%

Top companies by CAPEX/Revenue, %

Top 5	FY2011	FY2012	FY2013	FY2014	FY2015
Pioneer Distilleries ($PIONDIST)	33.1%	29.8%	35.0%	30.0%	12.3%
United Breweries ($UBL)	14.4%	10.7%	9.8%	5.0%	8.7%
Ifb Agro Industries ($IFBAGRO)	2.7%	4.6%	1.8%	9.8%	4.5%
United Spirits ($UNITDSPR)	3.7%	7.4%	2.8%	2.2%	1.8%
G.M.Breweries ($GMBREW)	7.2%	3.1%	6.7%	0.0%	0.0%
Median (5 companies)	7.2%	7.4%	4.5%	3.6%	4.5%
Tilaknagar Industries ($TI)	23.7%	20.6%	10.0%	14.8%	13.7%

Top companies by ROIC, %

Top 5	FY2011	FY2012	FY2013	FY2014	FY2015
G.M.Breweries ($GMBREW)	29.6%	18.4%	17.0%	21.9%	18.0%
Som Distilleries & Breweries ($SDBL)	25.8%	23.3%	22.2%	19.2%
Ifb Agro Industries ($IFBAGRO)	25.9%	33.3%	26.7%	18.8%	4.8%
United Breweries ($UBL)	12.4%	11.5%	11.6%	8.1%	14.3%
Silver Oak (India) ($SILVOAK)			8.4%	0.3%
Median (11 companies)	10.4%	14.9%	8.7%	8.1%	14.3%
Tilaknagar Industries ($TI)	13.3%	11.6%	11.7%	10.7%	4.6%

Top companies by Net Debt / EBITDA

Top 5	FY2011	FY2012	FY2013	FY2014	FY2015
Pioneer Distilleries ($PIONDIST)				10.4x	2.1x
United Breweries ($UBL)	1.9x	2.0x	2.5x	2.7x	1.3x
Silver Oak (India) ($SILVOAK)		2.7x	1.1x	1.2x
G.M.Breweries ($GMBREW)	0.9x	0.9x	0.7x	0.6x	0.5x
Khoday India ($KHODAY)	7.8x	2.5x	12.4x	0.0x
Median (7 companies)	1.9x	2.0x	1.1x	0.6x	1.3x
Tilaknagar Industries ($TI)	3.6x	4.3x	3.8x	4.8x	8.4x

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