Shalimar Paints CAPEX surged on 107% in 2015 while Revenue dropped on 10.3%

31-05-2015 • About Shalimar Paints ($SHALPAINTS) • By InTwits

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

• Shalimar Paints is a company in decline: FY2015 revenue growth was -10.3%, 5 years revenue CAGR was -3.6%
• EBITDA Margin is quite volatile: 2.1% in FY2015, 3.0% in FY2014, 7.6% in FY2013, 7.8% in FY2012, 7.2% in FY2011
• Shalimar Paints has low CAPEX intensity: 5 year average CAPEX/Revenue was 2.7%. At the same time it's a lot of higher than industry average of 10.7%.
• CAPEX is quite volatile: 283 in FY2015, 137 in FY2014, 106 in FY2013, 36.2 in FY2012, 52.4 in FY2011
• The company has potentially unprofitable business model: ROIC is at 2.4%
• It operates with high leverage: Net Debt/EBITDA is 13.7x while industry average is 2.4x

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

Shalimar Paints ($SHALPAINTS) key annual financial indicators

mln. INR	2011	2012	2013	2014	2015	2015/2014
P&L
Revenue	4,072	4,864	4,988	4,828	4,333	-10.3%
EBITDA	293	379	380	146	93	-36.4%
Net Income	117	145	110	-28	-106
Balance Sheet
Cash	105	131	150	43	10	-77.1%
Short Term Debt	585	688	811	965	1,099	13.8%
Long Term Debt	13	0	71	134	184	37.0%
Cash flow
Capex	52	36	106	137	283	107.1%
Ratios
Revenue growth	-21.8%	19.5%	2.5%	-3.2%	-10.3%
EBITDA growth	21.1%	29.3%	0.2%	-61.7%	-36.4%
EBITDA Margin	7.2%	7.8%	7.6%	3.0%	2.1%	-0.9%
Net Income Margin	2.9%	3.0%	2.2%	-0.6%	-2.4%	-1.9%
CAPEX, % of revenue	1.3%	0.7%	2.1%	2.8%	6.5%	3.7%
ROIC	23.6%	25.9%	22.2%	6.2%	2.4%	-3.8%
ROE	23.5%	24.6%	15.9%	-3.8%	-15.7%	-11.9%
Net Debt/EBITDA	1.7x	1.5x	1.9x	7.3x	13.7x	6.5x

Revenue and profitability

The company's Revenue dropped on 10.3% in FY2015. Revenue decline was accompanies by EBITDA margin decline. EBITDA Margin decreased slightly on 0.88 pp from 3.0% to 2.1% in FY2015.

Net Income marign decreased slightly on 1.9 pp from -0.58% to -2.4% in FY2015.

Capital expenditures (CAPEX) and working capital investments

In FY2015 Shalimar Paints had CAPEX/Revenue of 6.5%. The company showed CAPEX/Revenue growth of 5.8 pp from 0.74% in FY2012 to 6.5% in FY2015. It's average level of CAPEX/Revenue for the last three years was 3.8%.Battling declining revenue Shalimar Paints made large investments to CAPEX (306% of EBITDA) but that didn't help at least in this year.

Return on investment

The company operates at low but positive ROIC (2.42%) and negative ROE (-15.69%). ROIC decreased on 3.8 pp from 6.2% to 2.4% in FY2015. ROE dropped on 11.9 pp from -3.8% to -15.7% in FY2015.

Leverage (Debt)

Debt level is 13.7x Net Debt / EBITDA and 13.8x Debt / EBITDA. Net Debt / EBITDA surged on 6.5x from 7.3x to 13.7x in FY2015. Debt jumped on 16.7% in FY2015 while cash dropped on 77.1% in FY2015.

Management team

Surender Kumar Bhatia is a Shalimar Paints's CEO. Surender Kumar Bhatia has spent 3 years at the company. Surender Kumar Bhatia is a Shalimar Paints's CFO. Surender Kumar Bhatia has spent 3 years at the company.

Appendix 1: Peers in Furniture-Furnishing-Paints

Below you can find Shalimar Paints benchmarking vs. other companies in Furniture-Furnishing-Paints industry. It's shown for the period of 5 years for the key financial metrics. Each table has median value for all the companies in the industry together with individual financial data of the top-5 companies in the industry by particular financial metric.

Top companies by Revenue growth, %

Top 5	FY2011	FY2012	FY2013	FY2014	FY2015
Kajaria Ceramics ($KAJARIACER)		37.7%	22.8%	13.9%	19.1%
Asian Paints ($ASIANPAINT)		24.8%	13.3%	15.7%	11.3%
Nitco ($NITCO)		31.0%	-8.1%	0.1%	7.7%
Murudeshwar Ceramics ($MURUDCERA)		3.6%	-19.5%	1.3%	-5.5%
Hanung Toys & Textiles ($HANUNG)		24.6%	27.6%	-73.8%	-71.2%
Median (5 companies)		24.8%	13.3%	1.3%	7.7%
Shalimar Paints ($SHALPAINTS)		19.5%	2.5%	-3.2%	-10.3%

Top companies by EBITDA margin, %

Top 5	FY2011	FY2012	FY2013	FY2014	FY2015
Murudeshwar Ceramics ($MURUDCERA)	30.6%	23.6%	21.8%	21.6%	23.5%
Kajaria Ceramics ($KAJARIACER)	15.8%	15.8%	15.3%	15.6%	16.3%
Asian Paints ($ASIANPAINT)	17.3%	16.0%	16.0%	16.0%	16.0%
Neycer India ($NEYCERI)					9.3%
Jenson & Nicholson (India) ($JENSONICOL)					-9.5%
Median (5 companies)	17.3%	16.0%	16.0%	15.8%	16.0%
Shalimar Paints ($SHALPAINTS)	7.2%	7.8%	7.6%	3.0%	2.1%

Top companies by CAPEX/Revenue, %

Top	FY2011	FY2012	FY2013	FY2014	FY2015
Kajaria Ceramics ($KAJARIACER)	17.5%	5.7%	9.6%	8.5%	12.3%
Asian Paints ($ASIANPAINT)	2.0%	5.7%	5.9%	2.0%	3.2%
Median (2 companies)	13.3%	5.7%	7.7%	5.3%	7.8%
Shalimar Paints ($SHALPAINTS)	1.3%	0.7%	2.1%	2.8%	6.5%

Top companies by ROIC, %

Top 5	FY2011	FY2012	FY2013	FY2014	FY2015
Asian Paints ($ASIANPAINT)	50.4%	47.1%	43.0%	39.8%	37.1%
Kajaria Ceramics ($KAJARIACER)		27.9%	28.6%	28.8%	29.8%
Euro Ceramics ($EUROCERA)	12.7%	-8.1%	-11.2%
Neycer India ($NEYCERI)			-6.5%
Jenson & Nicholson (India) ($JENSONICOL)
Median (8 companies)	12.7%	10.7%	4.7%	28.8%	33.5%
Shalimar Paints ($SHALPAINTS)	23.6%	25.9%	22.2%	6.2%	2.4%

Top companies by Net Debt / EBITDA

Top	FY2011	FY2012	FY2013	FY2014	FY2015
Kajaria Ceramics ($KAJARIACER)	1.9x	1.3x	1.3x	0.8x	0.7x
Asian Paints ($ASIANPAINT)	0.1x	0.1x	-0.0x	0.0x	0.1x
Neycer India ($NEYCERI)		11.8x	107.4x		0.0x
Murudeshwar Ceramics ($MURUDCERA)	2.6x	3.2x	4.1x	0.0x	0.0x
Median (4 companies)	3.3x	6.2x	4.3x	0.0x	0.0x
Shalimar Paints ($SHALPAINTS)	1.7x	1.5x	1.9x	7.3x	13.7x

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