Mcnally Bharat Engineering Company Net Debt / EBITDA jumped on 20.7x from 7.6x to 28.3x in 2015 while EBITDA dropped on 65.1%

31-05-2015 • About Mcnally Bharat Engineering Company ($MBECL) • By InTwits

Mcnally Bharat Engineering Company reported FY2015 financial results today. Overall the company's long term financial model is characterised by the following facts:

Mcnally Bharat Engineering Company is a company in decline: FY2015 revenue growth was -8.1%, 5 years revenue CAGR was -4.4%
EBITDA Margin is quite volatile: 2.5% in FY2015, 6.7% in FY2014, 5.5% in FY2013, 5.8% in FY2012, 7.9% in FY2011
Mcnally Bharat Engineering Company has low CAPEX intensity: 5 year average CAPEX/Revenue was 2.3%. At the same time it's a lot of higher than industry average of 5.6%.
CAPEX is quite volatile: 287 in FY2015, 1,033 in FY2014, 419 in FY2013, 226 in FY2012, 196 in FY2011
The company has potentially unprofitable business model: ROIC is at 0.8%
It operates with high leverage: Net Debt/EBITDA is 28.3x while industry average is 4.5x

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

Mcnally Bharat Engineering Company ($MBECL) key annual financial indicators

mln. INR	2011	2012	2013	2014	2015	2015/2014
P&L
Revenue	23,923	26,432	26,821	26,319	24,180	-8.1%
EBITDA	1,898	1,534	1,466	1,763	616	-65.1%
Net Income	634	656	-219	-754	-743
Balance Sheet
Cash	999	552	451	518	581	12.3%
Short Term Debt	3,730	5,610	8,202	12,504	17,115	36.9%
Long Term Debt	1,813	1,572	2,470	1,448	889	-38.6%
Cash flow
Capex	812	618	713	582	277	-52.4%
Ratios
Revenue growth	-20.9%	10.5%	1.5%	-1.9%	-8.1%
EBITDA growth	8.2%	-19.2%	-4.5%	20.3%	-65.1%
EBITDA Margin	7.9%	5.8%	5.5%	6.7%	2.5%	-4.2%
Net Income Margin	2.6%	2.5%	-0.8%	-2.9%	-3.1%	-0.2%
CAPEX, % of revenue	3.4%	2.3%	2.7%	2.2%	1.1%	-1.1%
ROIC	19.7%	11.5%	8.2%	7.9%	0.8%	-7.2%
ROE	21.7%	19.2%	-5.9%	-22.3%	-23.0%	-0.7%
Net Debt/EBITDA	2.4x	4.3x	7.0x	7.6x	28.3x	20.7x

Revenue and profitability

Mcnally Bharat Engineering Company's Revenue decreased on 8.1% in FY2015. Revenue decline was accompanies by EBITDA margin decline. EBITDA Margin decreased on 4.2 pp from 6.7% to 2.5% in FY2015.

Net Income marign showed almost no change in FY2015.

Capital expenditures (CAPEX) and working capital investments

In FY2015 the company had CAPEX/Revenue of 1.1%. Mcnally Bharat Engineering Company showed small CAPEX/Revenue decline of 1.2 pp from 2.3% in FY2012 to 1.1% in FY2015. It's average level of CAPEX/Revenue for the last three years was 2.0%.

Return on investment

The company operates at low but positive ROIC (0.76%) and negative ROE (-22.98%). ROIC decreased on 7.2 pp from 7.9% to 0.76% in FY2015. ROE decreased slightly on 0.71 pp from -22.3% to -23.0% in FY2015.

Leverage (Debt)

Debt level is 28.3x Net Debt / EBITDA and 29.3x Debt / EBITDA. Net Debt / EBITDA jumped on 20.7x from 7.6x to 28.3x in FY2015. Debt surged on 29.0% in FY2015 while cash surged on 12.3% in FY2015.

Appendix 1: Peers in Construction & Engineering

Below we provide Mcnally Bharat Engineering Company 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
Thirthankar Infra ($THIRINFRA)					258.2%
Welspun Projects ($WELPROJ)		41.2%	-8.9%	-20.7%	239.1%
Mukand Engineers ($MUKANDENGG)		-14.3%	16.7%	12.4%	63.0%
Atlanta ($ATLANTA)		-47.6%	115.1%	28.1%	50.2%
Spml Infra ($SPMLINFRA)		-17.1%	19.3%	6.6%	35.0%
Median (29 companies)	-22.3%	9.7%	6.9%	7.1%	1.0%
Mcnally Bharat Engineering Company ($MBECL)		10.5%	1.5%	-1.9%	-8.1%

Top companies by EBITDA margin, %


Top 5	FY2011	FY2012	FY2013	FY2014	FY2015
Madhucon Projects ($MADHUCON)	11.6%	8.4%	31.9%	22.1%	32.1%
Jaiprakash Associates ($JPASSOCIAT)	44.0%	36.9%	35.9%	32.4%	31.5%
Arss Infrastructure Projects ($ARSSINFRA)	21.8%	14.0%	13.9%	22.0%	31.3%
Reliance Industrial Infrastructure ($RIIL)					30.8%
Shristi Infrastructure Development Corporation ($SHRISTI)	28.0%	27.2%	30.0%	30.0%	29.8%
Median (32 companies)	12.4%	12.4%	11.3%	10.7%	10.4%
Mcnally Bharat Engineering Company ($MBECL)	7.9%	5.8%	5.5%	6.7%	2.5%

Top companies by CAPEX/Revenue, %


Top 5	FY2011	FY2012	FY2013	FY2014	FY2015
Madhucon Projects ($MADHUCON)	149.8%	234.5%	155.1%	76.0%	67.4%
Shristi Infrastructure Development Corporation ($SHRISTI)	6.8%	0.0%	11.2%	14.1%	40.8%
Jaiprakash Associates ($JPASSOCIAT)	114.7%	97.0%	65.5%	45.0%	31.6%
Man Infraconstruction ($MANINFRA)	11.5%	7.8%	1.6%	25.0%	18.6%
Welspun Projects ($WELPROJ)	1.5%	0.4%		0.6%	17.3%
Median (21 companies)	6.1%	7.7%	8.6%	6.6%	3.2%
Mcnally Bharat Engineering Company ($MBECL)	3.4%	2.3%	2.7%	2.2%	1.1%

Top companies by ROIC, %


Top 5	FY2011	FY2012	FY2013	FY2014	FY2015
Skipper ($SKIPPER)	10.6%	10.4%	13.5%	14.7%	27.4%
Voltas ($VOLTAS)	32.9%	19.6%	11.7%	11.8%	19.3%
Coromandel Engineering Company ($COROENGG)	10.4%	-21.9%	3.4%	-0.3%	15.0%
Mbl Infrastructures ($MBLINFRA)	24.3%	21.3%	13.4%	14.0%	13.6%
Simplex Infrastructures ($SIMPLEXINF)	12.3%	10.7%	8.7%	8.9%	10.7%
Median (38 companies)	10.5%	8.6%	7.1%	5.6%	6.8%
Mcnally Bharat Engineering Company ($MBECL)	19.7%	11.5%	8.2%	7.9%	0.8%

Top companies by Net Debt / EBITDA


Top 5	FY2011	FY2012	FY2013	FY2014	FY2015
Jaiprakash Associates ($JPASSOCIAT)	7.6x	9.2x	8.9x	11.0x	11.9x
Madhucon Projects ($MADHUCON)	40.1x	96.8x	19.0x	16.4x	9.8x
Shristi Infrastructure Development Corporation ($SHRISTI)	7.8x	11.8x	8.6x	7.9x	9.4x
Hindustan Construction Co ($HCC)	10.0x	18.8x	20.3x	12.3x	9.3x
Jmc Projects (India) ($JMCPROJECT)	1.0x	3.0x	7.5x	9.2x	8.7x
Median (27 companies)	3.7x	4.7x	5.3x	5.9x	3.0x
Mcnally Bharat Engineering Company ($MBECL)	2.4x	4.3x	7.0x	7.6x	28.3x

Mcnally Bharat Engineering Company stock price chart

Mcnally Bharat Engineering Company financials

mln.	FY2010	FY2011	FY2012

Revenue	30,243	23,923	26,432
EBITDA	1,755	1,898	1,534
Net income	495.1	633.7	656.3
CAPEX	715.2	812.1	618.2
Debt	3,692	5,543	7,182
Cash	1,167	998.6	552.4

About Mcnally Bharat Engineering Company

McNally Bharat Engineering Company Limited is engaged in turnkey projects in infrastructure and related manufacturing activities primarily in India. The company offers its turnkey solutions in the areas of power, steel, aluminum, material handling, mineral beneficiation, pyroprocessing, coal washing, port cranes, cement, oil and gas, civic, and industrial water supply areas, as well as in the area of pneumatic handling of powdered materials, including fly ash handling and high concentrate disposal. It also manufactures a range of products, including crushing and screening equipment; mobile crushing and screening plant; grinding mills; feeders; scrubbers; and material handling equipment comprising wagon tipplers, stacker cum reclaimers, bucket elevators, pneumatic pumps, travelling trippers, conveyors and components, rack and pinion gates, flap and rod gates, paddle feeders, and screw conveyors. In addition, the company offers open cast mining machinery, such as bucket wheel excavators, crawler mounted spreaders, and shiftable conveyors; port handling equipment, including barge unloaders, bulk and container handling cranes, and shipyard cranes; EOT cranes; processing plant equipment comprising flotation cells, column flotation cells, thickeners, and centrifuge gravity concentrators; ash handling equipment; slurry pumps; pressure vessels; heat exchangers; and rotary kilns, dryers, and coolers. Further, it manufactures coal washery equipment; steel plant equipment; and product support and services, such as heavy fabrication, machining, gear cutting, carrying and thrust rollers for kilns, and large pulleys. The company was formerly known as McNally-Bird Engineering Company Limited and changed its name to McNally Bharat Engineering Company Limited in 1972. McNally Bharat Engineering Company Limited was founded in 1961 and is headquartered in Kolkata, India.