Nestle India reports 52.5% Net Income decline and 1.2 pp EBITDA Margin decline from 20.9% to 19.7%

12-02-2016 • About Nestle India ($NESTLEIND) • By InTwits

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

• Nestle India is a company in decline: FY2015 revenue growth was -17.2%, 5 years revenue CAGR was -3.1%
• Nestle India has medium CAPEX intensity: 5 year average CAPEX/Revenue was 8.0%. At the same time it's a lot of higher than industry average of 3.2%.
• CAPEX is quite volatile: 1,508 in FY2015, 1,894 in FY2014, 3,449 in FY2013, 9,768 in FY2012, 15,571 in FY2011
• The company has highly profitable business model: ROIC is at 40.2%

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

Nestle India ($NESTLEIND) key annual financial indicators

mln. INR	2011	2012	2013	2014	2015	2015/2014
P&L
Revenue	74,908	83,023	90,619	98,063	81,233	-17.2%
EBITDA	15,369	18,255	19,655	20,502	15,976	-22.1%
Net Income	9,616	10,679	11,171	11,847	5,633	-52.5%
Balance Sheet
Cash	2,272	2,370	7,494	4,458	4,996	12.1%
Short Term Debt	2,459	2	0	41	9	-77.1%
Long Term Debt	7,250	10,500	11,895	155	168	8.6%
Cash flow
Capex	15,571	9,768	3,449	1,894	1,508	-20.4%
Ratios
Revenue growth	-21.2%	10.8%	9.1%	8.2%	-17.2%
EBITDA growth	22.8%	18.8%	7.7%	4.3%	-22.1%
EBITDA Margin	20.5%	22.0%	21.7%	20.9%	19.7%	-1.2%
Net Income Margin	12.8%	12.9%	12.3%	12.1%	6.9%	-5.1%
CAPEX, % of revenue	20.8%	11.8%	3.8%	1.9%	1.9%	-0.1%
ROIC	85.4%	57.7%	47.9%	49.6%	40.2%	-9.3%
ROE	90.3%	69.5%	53.6%	45.5%	19.9%	-25.6%
Net Debt/EBITDA	0.5x	0.4x	0.2x	-0.2x	-0.3x	-0.1x

Revenue and profitability

The company's Revenue dropped on 17.2% in FY2015. Revenue decline was worsened by EBITDA margin decline. EBITDA Margin decreased slightly on 1.2 pp from 20.9% to 19.7% in FY2015.

Net Income marign decreased on 5.1 pp from 12.1% to 6.9% in FY2015.

Capital expenditures (CAPEX) and working capital investments

In FY2015 Nestle India had CAPEX/Revenue of 1.9%. CAPEX/Revenue decreased on 9.9 pp from 11.8% in FY2012 to 1.9% in FY2015. Average CAPEX/Revenue for the last three years was 2.5%.

Return on investment

The company operates at high and attractive ROIC (40.25%) while ROE is a bit lower (19.92%). ROIC decreased on 9.3 pp from 49.6% to 40.2% in FY2015. ROE dropped on 25.6 pp from 45.5% to 19.9% in FY2015.

Leverage (Debt)

Company's Net Debt / EBITDA is -0.3x and Debt / EBITDA is 0.0x. Net Debt / EBITDA decreased on 0.1x from -0.2x to -0.3x in FY2015. Debt decreased on 9.4% in FY2015 while cash surged on 12.1% in FY2015.

Appendix 1: Peers in Packaged Foods

Below we provide Nestle India benchmarking against other companies in Packaged Foods 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
Simran Farms ($SIMRAN)		38.4%	23.8%	27.5%	23.4%
Heritage Foods ($HERITGFOOD)		27.1%	15.0%	7.5%	20.4%
Rcl Foods ($RCLFOODS)		-56.8%	-34.2%	18.2%	17.8%
Umang Dairies ($UMANGDAIR)		46.8%	15.7%	24.5%	16.1%
Britannia Industries ($BRITANNIA)		19.0%	12.4%	11.3%	13.8%
Median (15 companies)		18.0%	15.0%	16.0%	9.6%
Nestle India ($NESTLEIND)		10.8%	9.1%	8.2%	-17.2%

Top companies by EBITDA margin, %

Top 5	FY2011	FY2012	FY2013	FY2014	FY2015
Glaxosmithkline Consumer Healthcare ($GSKCONS)	18.8%	18.6%	17.8%	22.5%	17.2%
Sampre Nutritions ($SAMPRE)					16.8%
Krbl ($KRBL)	14.7%	14.1%	14.2%	15.1%	15.4%
Adf Foods ($ADFFOODS)	16.2%	13.5%	11.2%	8.6%	14.5%
Britannia Industries ($BRITANNIA)	5.2%	5.7%	6.9%	9.2%	11.1%
Median (17 companies)	5.8%	7.2%	7.1%	7.1%	6.7%
Nestle India ($NESTLEIND)	20.5%	22.0%	21.7%	20.9%	19.7%

Top companies by CAPEX/Revenue, %

Top 5	FY2011	FY2012	FY2013	FY2014	FY2015
Venky'S (India) ($VENKYS)	6.4%	8.9%	6.6%	10.4%	7.7%
Krbl ($KRBL)	5.8%	4.1%	4.0%	6.1%	7.3%
Umang Dairies ($UMANGDAIR)	1.2%	2.0%	4.4%	2.7%	3.2%
Glaxosmithkline Consumer Healthcare ($GSKCONS)	3.6%	2.7%		4.3%	2.5%
Heritage Foods ($HERITGFOOD)	2.8%	2.1%	1.9%	3.7%	2.5%
Median (8 companies)	3.1%	3.7%	4.2%	4.3%	2.5%
Nestle India ($NESTLEIND)	20.8%	11.8%	3.8%	1.9%	1.9%

Top companies by ROIC, %

Top 5	FY2011	FY2012	FY2013	FY2014	FY2015
Kse ($KSE)	14.7%	27.7%	14.1%	36.9%	69.0%
Britannia Industries ($BRITANNIA)	17.8%	24.6%	33.7%	54.0%	59.4%
Glaxosmithkline Consumer Healthcare ($GSKCONS)	45.0%	44.6%			36.2%
Umang Dairies ($UMANGDAIR)	54.8%	93.5%	55.6%	22.3%	28.4%
Bambino Agro Industries ($BAMBINO)	13.5%	16.3%			18.1%
Median (19 companies)	11.3%	12.1%	10.9%	20.3%	18.1%
Nestle India ($NESTLEIND)	85.4%	57.7%	47.9%	49.6%	40.2%

Top companies by Net Debt / EBITDA

Top 5	FY2011	FY2012	FY2013	FY2014	FY2015
Vadilal Industries ($VADILALIND)	5.8x	2.6x	4.5x	3.9x	4.0x
Venky'S (India) ($VENKYS)	0.9x	2.6x	2.8x	6.7x	3.9x
Bambino Agro Industries ($BAMBINO)	3.1x	3.2x		3.2x	2.9x
Krbl ($KRBL)	3.7x	4.1x	2.9x	3.0x	2.7x
Heritage Foods ($HERITGFOOD)	3.5x	2.2x	0.9x	1.0x	1.4x
Median (16 companies)	2.3x	1.9x	1.3x	1.1x	0.0x
Nestle India ($NESTLEIND)	0.5x	0.4x	0.2x	-0.2x	-0.3x

Similar news

12-02-2016 Diana Tea Co EBITDA dropped on 20.4% in 2015 while Revenue jumped on 11.6%

12-02-2016 Value Industries reports 74.1% revenue decline in FY2015

11-02-2016 Goodricke Group Net Income surged on 126% in 2015 and Revenue increased on 9.9%

10-02-2016 Acc Net Income dropped on 49.4% in 2015 while EBITDA Margin increased slightly on 1.5 pp from 12.9% to 14.4%

10-02-2016 Shree Digvijay Cement Co EBITDA surged on 20.4% in 2015 and EBITDA Margin increased slightly on 1.6 pp from 4.3% to 5.9%