Kennametal India Net Income surged on 96.4% in 2015 and Revenue increased on 4.6%
21-08-2015 • About Kennametal India (
$KENNAMET) • By InTwits
Kennametal India reported FY2015 financial results today. Overall the company's long term financial model is characterised by the following facts:
- EBITDA Margin is quite volatile: 10.6% in FY2015, 9.2% in FY2014, 7.9% in FY2013, 20.2% in FY2012, 27.6% in FY2011
- Kennametal India has low CAPEX intensity: 5 year average CAPEX/Revenue was 4.8%. At the same time it's in pair with industry average of 4.3%.
- CAPEX is quite volatile: 174 in FY2015, 79.4 in FY2014, 241 in FY2013, 479 in FY2012, 297 in FY2011
- The company has business model with low profitability: ROIC is at 10.0%
Below you can find a comprehensive analysis of the key data driving the company's performance and stock price.
Kennametal India ($KENNAMET) key annual financial indicators
| mln. INR | 2011 | 2012 | 2013 | 2014 | 2015 | 2015/2014 |
|---|
P&L
|
|---|
| Revenue | 5,015 | 5,552 | 4,898 | 5,451 | 5,703 | 4.6% |
| EBITDA | 1,384 | 1,119 | 388 | 500 | 606 | 21.2% |
| Net Income | 886 | 684 | 149 | 171 | 335 | 96.4% |
Balance Sheet
|
|---|
| Cash | 874 | 447 | 536 | 566 | 948 | 67.5% |
| Short Term Debt | 0 | 0 | 0 | 0 | 0 | |
| Long Term Debt | 0 | 0 | 0 | 0 | 0 | |
Cash flow
|
|---|
| Capex | 297 | 479 | 241 | 79 | 174 | 119.5% |
Ratios
|
|---|
| Revenue growth | -28.2% | 10.7% | -11.8% | 11.3% | 4.6% | |
| EBITDA growth | 59.0% | -19.1% | -65.4% | 28.9% | 21.2% | |
| EBITDA Margin | 27.6% | 20.2% | 7.9% | 9.2% | 10.6% | 1.5% |
| Net Income Margin | 17.7% | 12.3% | 3.0% | 3.1% | 5.9% | 2.7% |
| CAPEX, % of revenue | 5.9% | 8.6% | 4.9% | 1.5% | 3.1% | 1.6% |
| ROIC | 38.7% | 29.6% | 3.9% | 7.1% | 10.0% | 2.9% |
| ROE | 29.8% | 22.9% | 4.8% | 5.3% | 9.6% | 4.4% |
| Net Debt/EBITDA | -0.6x | -0.4x | -1.4x | -1.1x | -1.6x | -0.4x |
Revenue and profitability
The company's Revenue increased on 4.6% in FY2015. Revenue growth happened at the same time with EBITDA margin expansion. EBITDA Margin increased slightly on 1.5 pp from 9.2% to 10.6% in FY2015.
Net Income marign increased on 2.7 pp from 3.1% to 5.9% in FY2015.
Capital expenditures (CAPEX) and working capital investments
The company's CAPEX/Revenue was 3.1% in FY2015. Kennametal India's CAPEX/Revenue decreased on 5.6 pp from 8.6% in FY2012 to 3.1% in FY2015. It's average level of CAPEX/Revenue for the last three years was 3.1%.
Return on investment
The company operates at low ROIC (9.98%) and ROE (9.65%). ROIC increased on 2.9 pp from 7.1% to 10.0% in FY2015. ROE increased on 4.4 pp from 5.3% to 9.6% in FY2015.
Leverage (Debt)
The company has no debt. Cash jumped on 67.5% in FY2015.
Valuation
Kennametal India's trades at EV/EBITDA 26.7x and P/E 51.1x while industy averages are 10.5x and 26.1x. Kennametal India's EV/(EBITDA-CAPEX) is 37.5x with the industry average at 4.7x.
Management team
Bhagya Chandra Rao is a the company's CEO. Bhagya Chandra Rao has spent 6 years at the company.
Appendix 1: Peers in Industrial Machinery
Below you can find Kennametal India benchmarking vs. other companies in Industrial Machinery 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 |
|---|
| Lloyd Electric & Engineering ($LLOYDELENG) | | 32.2% | 9.9% | 20.5% | 22.3% |
| Kabra Extrusiontechnik ($KABRAEXTRU) | | -13.3% | -8.7% | 28.4% | 21.6% |
| Akar Tools ($AKARTOOL) | | 21.1% | 2.1% | -2.3% | 16.7% |
| Honda Siel Power Products ($HONDAPOWER) | | 28.1% | 2.4% | 5.0% | 16.5% |
| Mazda ($MAZDALTD) | | 22.1% | 14.7% | -15.6% | 16.2% |
| |
|---|
| Median (25 companies) | 243.5% | 20.1% | 2.3% | 0.9% | 3.7% |
|---|
| Kennametal India ($KENNAMET) | | 10.7% | -11.8% | 11.3% | 4.6% |
Top companies by Gross margin, %
| Top | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Bell Agromachina ($BELAGRO) | | 0.0% | 0.0% | 0.0% | 0.0% |
| |
|---|
| Median (1 company) | | 0.0% | 0.0% | 0.0% | 0.0% |
|---|
Top companies by EBITDA margin, %
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Texmaco Infrastructure & Holdings ($TEXINFRA) | | | | | 40.5% |
| Dhp India ($DHPIND) | | | | | 26.3% |
| Solitaire Machine Tools ($SOLIMAC) | | | | | 19.4% |
| Wendt (India) ($WENDT) | 30.8% | 28.3% | 21.6% | 18.6% | 19.0% |
| Goldstone Infratech ($GOLDINFRA) | | | | | 18.1% |
| |
|---|
| Median (40 companies) | 13.5% | 10.7% | 9.6% | 10.5% | 9.7% |
|---|
| Kennametal India ($KENNAMET) | 27.6% | 20.2% | 7.9% | 9.2% | 10.6% |
Top companies by CAPEX/Revenue, %
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Texmaco Infrastructure & Holdings ($TEXINFRA) | | | | | 14.0% |
| Wendt (India) ($WENDT) | 7.2% | 13.5% | 9.0% | 8.8% | 9.4% |
| Ingersoll-Rand (India) ($INGERRAND) | 1.3% | 4.3% | 10.9% | 3.6% | 9.2% |
| Kabra Extrusiontechnik ($KABRAEXTRU) | 5.4% | 6.5% | 1.8% | 0.5% | 8.8% |
| Forbes & Company ($FORBESCO) | 2.8% | 1.8% | 2.6% | 3.0% | 5.1% |
| |
|---|
| Median (20 companies) | 3.4% | 5.5% | 3.7% | 3.0% | 3.2% |
|---|
| Kennametal India ($KENNAMET) | 5.9% | 8.6% | 4.9% | 1.5% | 3.1% |
Top companies by ROIC, %
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Greaves Cotton ($GREAVESCOT) | | | 24.8% | 16.3% | 26.7% |
| Gmm Pfaudler ($GMM) | 14.2% | -76.2% | 6.8% | 17.4% | 18.2% |
| Lakshmi Machine Works ($LAXMIMACH) | 16.8% | 18.0% | 11.7% | 16.2% | 17.6% |
| Honda Siel Power Products ($HONDAPOWER) | 17.3% | 16.9% | 8.8% | 11.5% | 15.3% |
| Wendt (India) ($WENDT) | | 38.2% | 20.2% | 16.2% | 15.1% |
| |
|---|
| Median (49 companies) | 14.6% | 12.6% | 10.9% | 9.7% | 12.5% |
|---|
| Kennametal India ($KENNAMET) | 38.7% | 29.6% | 3.9% | 7.1% | 10.0% |
Top companies by Net Debt / EBITDA
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Forbes & Company ($FORBESCO) | 3.5x | 2.2x | 3.3x | 4.7x | 6.3x |
| Nitin Fire Protection Industries ($NITINFIRE) | 2.0x | 3.6x | 3.5x | 3.0x | 3.7x |
| Elgi Equipments ($ELGIEQUIP) | -0.7x | -1.2x | 2.3x | 2.7x | 3.3x |
| Lloyd Electric & Engineering ($LLOYDELENG) | 4.0x | 3.2x | 3.0x | 3.7x | 3.2x |
| Elecon Engineering Co ($ELECON) | 3.1x | 3.0x | 3.2x | 4.0x | 3.1x |
| |
|---|
| Median (32 companies) | 1.3x | 1.1x | 1.7x | 0.0x | 0.0x |
|---|
| Kennametal India ($KENNAMET) | -0.6x | -0.4x | -1.4x | -1.1x | -1.6x |
