Hindustan Zinc reports 11.1% EBITDA decline in 2016 and 3.6 pp EBITDA Margin decline from 51.2% to 47.6%
21-04-2016 • About Hindustan Zinc (
$HINDZINC) • By InTwits
Hindustan Zinc reported FY2016 financial results today. Overall the company's long term financial model is characterised by the following facts:
- EBITDA Margin is declining: 47.6% in FY2016 vs. 51.2% in FY2015 vs. 53.9% in FY2012
- Hindustan Zinc has high CAPEX intensity: 5 year average CAPEX/Revenue was 13.0%. At the same time it's in pair with industry average of 11.4%
- CAPEX is quite volatile: ₹16,491m in FY2016, ₹55,744m in FY2015, ₹28,733m in FY2014, ₹16,313m in FY2013, ₹29,558m in FY2012
- The company has highly profitable business model: ROIC is 13.8%
Below you can find a comprehensive analysis of the key data driving the company's performance and the stock price.
Revenue and profitability
The company's Revenue decreased on 4.3%. Revenue decline was accelerating on average at -3.9 pp per annum in the last 5 years. Revenue decline was worsened by EBITDA margin decline. EBITDA Margin decreased on 3.6 pp from 51.2% to 47.6% in FY2016. EBITDA Margin followed a declining trend at -1.3 pp per annum in the last 5 years.
Net Income margin increased on 2.4 pp from 56.1% to 58.5% in FY2016.
Investments (CAPEX, working capital and M&A)
The company's CAPEX/Revenue was 11.4% in FY2016. CAPEX/Revenue decreased on 2.6 pp from 14.0% in FY2013 to 11.4% in FY2016. For the last three years the average CAPEX/Revenue was 12.0%. CAPEX as a % of Revenue stuck to a declining trend at -0.98 pp per annum in FY2012-FY2016.
Return on investment
The company operates at high and attractive ROE (20.2%) while ROIC is a bit lower (13.8%). ROIC decreased on 2.3 pp from 16.0% to 13.8% in FY2016. ROE showed almost no change in FY2016. ROIC stuck to a declining trend at -1.8 pp per annum in FY2012-FY2016.
Leverage (Debt)
The company has no debt. Cash dropped on 98.5%.
Valuation and dividends
The company's trades at EV/EBITDA 11.1x and P/E 9.0x while industy averages are 17.8x and 21.9x. Hindustan Zinc's EV/(EBITDA-CAPEX) is 14.6x with the industry average at 22.8x.
Management team
Hindustan Zinc's CEO is Sunil Duggal. Sunil Duggal has 5 years tenure with the company. The company's CFO Amitabh Gupta has spent 8 years with the company.
Financial and operational results
Hindustan Zinc ($HINDZINC) key annual financial indicators| mln. INR | 2012 | 2013 | 2014 | 2015 | 2016 | 2016/2015 |
|---|
P&L
|
|---|
| Revenue | 112,551 | 125,257 | 134,590 | 145,887 | 139,590 | -4.3% |
| EBITDA | 60,697 | 64,818 | 69,617 | 74,687 | 66,404 | -11.1% |
| Net Income | 55,260 | 68,995 | 69,046 | 81,780 | 81,666 | -0.1% |
Balance Sheet
|
|---|
| Cash | 42,053 | 37,418 | 30,312 | 35,312 | 525 | -98.5% |
| Short Term Debt | 4 | 4 | 0 | 0 | 0 | |
| Long Term Debt | 0 | 0 | 0 | 0 | 0 | |
Cash flow
|
|---|
| Capex | 16,719 | 17,558 | 18,131 | 16,174 | 15,966 | -1.3% |
Ratios
|
|---|
| Revenue growth | 13.5% | 11.3% | 7.5% | 8.4% | -4.3% | |
| EBITDA growth | 8.2% | 6.8% | 7.4% | 7.3% | -11.1% | |
|
|---|
| EBITDA Margin | 53.9% | 51.7% | 51.7% | 51.2% | 47.6% | -3.6% |
| Net Income Margin | 49.1% | 55.1% | 51.3% | 56.1% | 58.5% | 2.4% |
| CAPEX, % of revenue | 14.9% | 14.0% | 13.5% | 11.1% | 11.4% | 0.4% |
|
|---|
| ROIC | 21.2% | 18.9% | 17.0% | 16.0% | 13.8% | -2.3% |
| ROE | 22.4% | 23.3% | 19.8% | 20.2% | 20.2% | -0.0% |
| Net Debt/EBITDA | -0.7x | -0.6x | -0.4x | -0.5x | -0.0x | 0.5x |
Peers in Zinc
Below we provide Hindustan Zinc benchmarking against other companies in Zinc 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.
