Sasken Communication Technologies reports 72.5% Net Income growth in 2016 and 12.9% Revenue growth
22-04-2016 • About Sasken Communication Technologies (
$SASKEN) • By InTwits
Sasken Communication Technologies reported FY2016 financial results today. Here are the key drivers of the company's long term financial model:
- Sasken Communication Technologies has low CAPEX intensity: 5 year average CAPEX/Revenue was 1.6%. At the same time it's a lot of higher than industry average of 5.3%.
- CAPEX is quite volatile: ₹42m in FY2016, ₹41m in FY2015, ₹46m in FY2014, ₹59m in FY2013, ₹204m in FY2012
- The company has business model with low profitability: ROIC is 8.2%
Below you can find a comprehensive analysis of the key data driving the company's performance and the stock price.
Revenue and profitability
Sasken Communication Technologies's Revenue surged on 12.9%. Despite revenue decline the EBITDA margin expanded. EBITDA Margin increased on 5.6 pp from 2.1% to 7.8% in FY2016.
Net Income margin surged on 14.8 pp from 27.9% to 42.7% in FY2016. Net Income margin followed a growing trend at 8.2 pp per annum in the last 5 years.
Investments (CAPEX, working capital and M&A)
Sasken Communication Technologies's CAPEX/Revenue was 0.87% in FY2016. CAPEX/Revenue showed almost no change from FY2013 to FY2016. It's average CAPEX/Revenue for the last three years was 0.95%. CAPEX as a % of Revenue pursued a declining trend in FY2012-FY2016.
Return on investment
The company operates at good ROE (43.6%) while ROIC is low (8.2%). ROIC increased on 3.4 pp from 4.9% to 8.2% in FY2016. ROE surged on 15.6 pp from 28.0% to 43.6% in FY2016. During the last 5 years ROE bottomed in FY2013 at 7.3% and was growing since that time.
Leverage (Debt)
Debt level is -0.4x Net Debt / EBITDA and 0.0x Debt / EBITDA. Debt increased on 6.5% while cash dropped on 83.4%.
Sasken Communication Technologies has no short term refinancing risk: cash is higher than short term debt (1,754.6%).
Financial and operational results
Sasken Communication Technologies ($SASKEN) key annual financial indicators| mln. INR | 2012 | 2013 | 2014 | 2015 | 2016 | 2016/2015 |
|---|
P&L
|
|---|
| Revenue | 5,200 | 4,748 | 4,580 | 4,280 | 4,832 | 12.9% |
| EBITDA | 786 | 421 | 538 | 322 | 472 | 46.3% |
| Net Income | 640 | 320 | 515 | 1,196 | 2,063 | 72.5% |
Balance Sheet
|
|---|
| Cash | 226 | 317 | 328 | 1,246 | 207 | -83.4% |
| Short Term Debt | 0 | 14 | 12 | 11 | 12 | 6.5% |
| Long Term Debt | 23 | 9 | 0 | 0 | 0 | |
Cash flow
|
|---|
| Capex | 204 | 59 | 46 | 41 | 42 | 4.0% |
Ratios
|
|---|
| Revenue growth | -4.8% | -8.7% | -3.5% | -6.6% | 12.9% | |
| EBITDA growth | -21.6% | -46.5% | 27.8% | -40.1% | 46.3% | |
|
|---|
| EBITDA Margin | 15.1% | 8.9% | 11.7% | 7.5% | 9.8% | 2.2% |
| Net Income Margin | 12.3% | 6.7% | 11.2% | 27.9% | 42.7% | 14.8% |
| CAPEX, % of revenue | 3.9% | 1.2% | 1.0% | 0.9% | 0.9% | -0.1% |
|
|---|
| ROIC | 12.7% | 5.2% | 10.0% | 4.9% | 8.2% | 3.4% |
| ROE | 14.4% | 7.3% | 12.4% | 28.0% | 43.6% | 15.6% |
| Net Debt/EBITDA | -0.3x | -0.7x | -0.6x | -3.8x | -0.4x | 3.4x |
Peers in IT Consulting & Software
Below we provide Sasken Communication Technologies benchmarking against other companies in IT Consulting & Software 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 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Ramco Systems ($RAMCOSYS) | 9.3% | 7.3% | 9.9% | 37.0% | - |
| Cyient ($CYIENT) | - | 20.6% | 17.8% | 24.0% | 13.1% |
| Empower India ($EMPOWER) | -3.7% | -13.2% | -32.6% | 23.9% | - |
| Hexaware Technologies ($HEXAWARE) | 34.3% | 17.3% | 13.0% | 21.0% | - |
| Tech Mahindra ($TECHM) | 6.8% | 25.2% | 174.0% | 20.1% | - |
| |
|---|
| Median (22 companies) | 19.5% | 20.6% | 14.2% | 9.1% | 14.0% |
|---|
| Sasken Communication Technologies ($SASKEN) | - | -8.7% | -3.5% | -6.6% | 12.9% |
Top companies by Gross margin, %
| Top | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Tata Consultancy Services ($TCS) | - | - | 47.4% | 42.4% | 43.9% |
| Infosys ($INFY) | 41.3% | 98.1% | 35.9% | 38.3% | 37.4% |
| Mindtree ($MINDTREE) | 31.5% | 36.2% | - | 34.8% | 32.4% |
| Wipro ($WIPRO) | 29.2% | 30.4% | 32.0% | 31.6% | 30.4% |
| |
|---|
| Median (4 companies) | 32.7% | 36.2% | 35.9% | 36.6% | 34.9% |
|---|
Top companies by EBITDA margin, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Oracle Financial Services Software ($OFSS) | 35.3% | 35.2% | 37.4% | 39.7% | - |
| Infosys ($INFY) | 31.6% | 27.9% | 26.3% | 27.1% | 27.1% |
| Tata Consultancy Services ($TCS) | 29.5% | 28.6% | 30.7% | 26.1% | 28.2% |
| Wipro ($WIPRO) | 19.1% | 20.9% | 22.4% | 22.3% | 21.1% |
| Mindtree ($MINDTREE) | 15.1% | 19.8% | 20.6% | 20.3% | 17.7% |
| |
|---|
| Median (25 companies) | 15.1% | 17.8% | 18.5% | 14.2% | 17.7% |
|---|
| Sasken Communication Technologies ($SASKEN) | 15.1% | 8.9% | 11.7% | 7.5% | 9.8% |
Top companies by CAPEX/Revenue, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Ramco Systems ($RAMCOSYS) | - | 22.1% | 15.3% | 12.4% | - |
| Niit Technologies ($NIITTECH) | 5.9% | 4.6% | 6.1% | 7.9% | - |
| Financial Technologies (India) ($FINANTECH) | 8.9% | 11.4% | - | 6.5% | 5.4% |
| Mindtree ($MINDTREE) | 2.5% | 4.5% | 5.0% | 5.6% | 3.4% |
| Tech Mahindra ($TECHM) | 5.4% | 2.6% | 5.0% | 5.0% | - |
| |
|---|
| Median (20 companies) | 3.7% | 3.5% | 3.5% | 3.1% | 3.8% |
|---|
| Sasken Communication Technologies ($SASKEN) | 3.9% | 1.2% | 1.0% | 0.9% | 0.9% |
Top companies by ROIC, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Tata Consultancy Services ($TCS) | 48.6% | 48.4% | 50.2% | 40.5% | 44.4% |
| Hexaware Technologies ($HEXAWARE) | 33.5% | 39.2% | 34.7% | 35.7% | - |
| Mindtree ($MINDTREE) | 24.9% | 34.6% | 36.2% | 32.0% | 28.9% |
| Sqs India Bfsi ($SQSBFSI) | 12.1% | 27.0% | 29.4% | 30.6% | - |
| Tech Mahindra ($TECHM) | 15.4% | 20.1% | 43.0% | 29.7% | - |
| |
|---|
| Median (30 companies) | 19.6% | 21.4% | 23.2% | 20.8% | 21.2% |
|---|
| Sasken Communication Technologies ($SASKEN) | 12.7% | 5.2% | 10.0% | 4.9% | 8.2% |
Top companies by Net Debt / EBITDA
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| 3I Infotech ($3IINFOTECH) | 8.5x | 20.3x | 27.7x | 14.7x | - |
| Ramco Systems ($RAMCOSYS) | 8.8x | - | 27.6x | 4.2x | - |
| Onward Technologies ($ONWARDTEC) | 2.4x | 2.2x | 4.1x | 1.9x | - |
| Kpit Technologies ($KPIT) | 0.3x | 0.5x | 0.7x | 0.4x | - |
| Mphasis ($MPHASIS) | -0.1x | 0.2x | - | 0.2x | - |
| |
|---|
| Median (23 companies) | -0.0x | -0.2x | -0.2x | -0.2x | -0.2x |
|---|
| Sasken Communication Technologies ($SASKEN) | -0.3x | -0.7x | -0.6x | -3.8x | -0.4x |
