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Cairn India reports 311% Net Income decline in 2016 and 33.6 pp EBITDA Margin decline from 73.1% to 39.5%

22-04-2016 • About Cairn India ($CAIRN) • By InTwits

Cairn India reported FY2016 financial results today. Overall the company's long term financial model is characterised by the following facts:
  • Cairn India is a company in decline: FY2016 revenue growth was -41.1%, 5 years revenue CAGR was -3.4%
  • EBITDA Margin is declining: 39.5% in FY2016 vs. 73.1% in FY2015 vs. 78.6% in FY2012
  • Cairn India has high CAPEX intensity: 5 year average CAPEX/Revenue was 21.4%. At the same time it's in pair with industry average of 18.0%
  • 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 potentially unprofitable business model: ROIC is 0.5%
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 dropped on 41.1%. During the last 5 years Revenue growth topped in FY2013 at 48.3% and was decelerating since that time. Revenue decline was worsened by EBITDA margin decline. EBITDA Margin dropped on 33.6 pp from 73.1% to 39.5% in FY2016. EBITDA Margin pursued a declining trend in the last 5 years.

Net Income margin dropped on 140 pp from 30.6% to -109% in FY2016. During the last 5 years Net Income margin topped in FY2013 at 68.8% and was declining since that time.

Investments (CAPEX, working capital and M&A)


The company's CAPEX/Revenue was 19.1% in FY2016. The company showed CAPEX/Revenue growth of 9.8 pp from 9.3% in FY2013 to 19.1% in FY2016. It's average level of CAPEX/Revenue for the last three years was 24.2%.

Return on investment


The company operates at low but positive ROIC (0.5%) and negative ROE (-17.5%). ROIC decreased on 9.6 pp from 10.0% to 0.47% in FY2016. ROE dropped on 25.2 pp from 7.7% to -17.5% in FY2016. During the last 5 years ROIC topped in FY2013 at 22.7% and was declining since that time. During FY2012-FY2016 ROE topped in FY2013 at 25.1% and was declining since that time.

Leverage (Debt)


The company has no debt. Cash jumped on 297%.

Financial and operational results


Cairn India ($CAIRN) key annual financial indicators

mln. INR201220132014201520162016/2015
P&L
Revenue118,171175,195187,612146,45486,256-41.1%
EBITDA92,851130,746137,429107,07734,098-68.2%
Net Income79,377120,564124,31844,796-94,319-310.6%
Balance Sheet
Cash44,4644632,2793,71614,769297.4%
Short Term Debt12,5180000
Long Term Debt00000
Cash flow
Capex29,55816,31328,73355,74416,491-70.4%
Ratios
Revenue growth15.5%48.3%7.1%-21.9%-41.1%
EBITDA growth10.7%40.8%5.1%-22.1%-68.2%
EBITDA Margin78.6%74.6%73.3%73.1%39.5%-33.6%
Net Income Margin67.2%68.8%66.3%30.6%-109.3%-139.9%
CAPEX, % of revenue25.0%9.3%15.3%38.1%19.1%-18.9%
ROIC16.6%22.7%21.3%10.0%0.5%-9.6%
ROE17.9%25.1%23.6%7.7%-17.5%-25.2%
Net Debt/EBITDA-0.3x-0.0x-0.0x-0.0x-0.4x-0.4x

Peers in Exploration & Production


Below we provide Cairn India benchmarking against other companies in Exploration & Production 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  FY2012 FY2013 FY2014 FY2015 FY2016
Aban Offshore ($ABAN)-5.5%16.1%7.2%2.7%-
Oil India ($OIL)18.5%1.1%-2.8%-2.2%-
Oil And Natural Gas Corporation ($ONGC)24.5%10.3%7.3%-8.0%-
Shiv-Vani Oil & Gas Exploration Services ($SHIV-VANI)1.5%-16.5%-72.5%-40.0%-
 
Median (4 companies)10.0%5.7%2.2%-5.1%-
Cairn India ($CAIRN)-48.3%7.1%-21.9%-41.1%


Top companies by EBITDA margin, %

Top 5 FY2012 FY2013 FY2014 FY2015 FY2016
Aban Offshore ($ABAN)59.7%55.4%57.0%58.9%-
Selan Exploration Technology ($SELAN)---44.3%-
Oil India ($OIL)42.7%43.7%37.6%38.3%-
Oil And Natural Gas Corporation ($ONGC)33.9%27.3%28.4%26.7%-
Shiv-Vani Oil & Gas Exploration Services ($SHIV-VANI)46.7%45.1%--56.2%-
 
Median (5 companies)44.7%44.4%37.6%38.3%-
Cairn India ($CAIRN)78.6%74.6%73.3%73.1%39.5%


Top companies by CAPEX/Revenue, %

Top  FY2012 FY2013 FY2014 FY2015 FY2016
Oil India ($OIL)9.4%17.9%29.4%31.6%-
Aban Offshore ($ABAN)20.9%25.4%36.1%22.7%-
Oil And Natural Gas Corporation ($ONGC)13.1%11.1%8.6%10.6%-
Selan Exploration Technology ($SELAN)---5.8%-
 
Median (4 companies)17.0%17.9%29.4%16.6%-
Cairn India ($CAIRN)25.0%9.3%15.3%38.1%19.1%


Top companies by ROIC, %

Top 5 FY2012 FY2013 FY2014 FY2015 FY2016
Oil And Natural Gas Corporation ($ONGC)25.2%18.6%15.8%10.2%-
Selan Exploration Technology ($SELAN)23.2%21.9%18.6%9.7%-
Aban Offshore ($ABAN)8.6%9.2%9.4%9.1%-
Oil India ($OIL)19.8%18.3%10.5%8.6%-
Shiv-Vani Oil & Gas Exploration Services ($SHIV-VANI)11.7%8.0%---
 
Median (5 companies)19.8%18.3%13.1%9.4%-
Cairn India ($CAIRN)16.6%22.7%21.3%10.0%0.5%


Top companies by Net Debt / EBITDA

Top  FY2012 FY2013 FY2014 FY2015 FY2016
Aban Offshore ($ABAN)7.1x6.6x6.5x5.9x-
Oil And Natural Gas Corporation ($ONGC)-0.2x0.0x0.5x1.1x-
Oil India ($OIL)-0.0x0.2x2.7x0.0x-
Selan Exploration Technology ($SELAN)-1.7x-0.2x-2.2x-3.2x-
 
Median (4 companies)-0.0x0.2x1.6x0.6x-
Cairn India ($CAIRN)-0.3x-0.0x-0.0x-0.0x-0.4x


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