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Raymond reports 50.3% CAPEX growth in 2016 and 4.9% Revenue growth

26-04-2016 • About Raymond ($RAYMOND) • By InTwits

Raymond reported FY2016 financial results today. Overall the company's long term financial model is characterised by the following facts:
  • Raymond has medium CAPEX intensity: 5 year average CAPEX/Revenue was 5.0%. At the same time it's a lot of higher than industry average of 3.7%.
  • CAPEX is quite volatile: ₹4,662m in FY2016, ₹1,044m in FY2015, ₹951m in FY2014, ₹775m in FY2013, ₹669m in FY2012
  • The company has business model with low profitability: ROIC is 7.4%
  • It operates with high leverage: Net Debt/EBITDA is 4.5x while industry average is 1.2x
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 increased on 4.9%. Having declining revenue the company managed to increase EBITDA margin. EBITDA Margin increased on 2.3 pp from 13.7% to 16.0% in FY2016.

SG&A as a % of Revenue decreased slightly on 0.70 pp from 7.8% to 7.1% in FY2016.

Net Income margin showed almost no change in FY2016.

Investments (CAPEX, working capital and M&A)


The company's CAPEX/Revenue was 6.2% in FY2016. Raymond showed small growth in CAPEX/Revenue of 1.0 pp from 5.2% in FY2013 to 6.2% in FY2016. Average CAPEX/Revenue for the last three years was 4.4%. The company maintained rich investment policy and has spent a big chunk of EBITDA (79.2%) to CAPEX. During the last 5 years CAPEX as a % of Revenue bottomed in FY2014 at 2.8% and was growing since that time.

Return on investment


The company operates at low ROIC (7.4%) and ROE (5.8%). ROIC showed almost no change in FY2016. ROE decreased slightly on 1.7 pp from 7.5% to 5.8% in FY2016.

Leverage (Debt)


Company's Net Debt / EBITDA is 4.5x and Debt / EBITDA is 4.7x. Net Debt / EBITDA jumped on 0.4x from 4.1x to 4.5x in FY2016. Debt increased on 9.1% while cash dropped on 24.9%.

Raymond has short term refinancing risk: cash is only 8.9% of short term debt.

Valuation and dividends


The company's trades at EV/EBITDA 10.0x and P/E 26.4x while industy averages are 17.8x and 21.9x. The company's EV/(EBITDA-CAPEX) is 48.3x with the industry average at 22.8x.

Management team


Raymond's CEO is Gautam Hari Singhania. Gautam Hari Singhania has 20 years tenure with the company. Sanjay Bahl is a Raymond's CFO. Sanjay Bahl has spent 4 years at the company.

Financial and operational results


Raymond ($RAYMOND) key annual financial indicators

mln. INR201220132014201520162016/2015
P&L
Revenue36,42440,69245,48053,32655,9474.9%
SG&A4,1543,968-4.5%
EBITDA4,6013,7324,9884,2754,3762.4%
Net Income1,5582871,0761,128921-18.4%
Balance Sheet
Cash2893104761,231924-24.9%
Short Term Debt8,6279,3677,8289,30710,35611.3%
Long Term Debt8,8398,16511,1789,50310,1616.9%
Cash flow
Capex2,4612,1031,2762,3063,46650.3%
Ratios
Revenue growth19.7%11.7%11.8%17.3%4.9%
EBITDA growth11.0%-18.9%33.6%-14.3%2.4%
EBITDA Margin12.6%9.2%11.0%8.0%7.8%-0.2%
SG&A, % of revenue7.8%7.1%-0.7%
Net Income Margin4.3%0.7%2.4%2.1%1.6%-0.5%
CAPEX, % of revenue6.8%5.2%2.8%4.3%6.2%1.9%
ROIC10.2%5.9%9.2%7.6%7.4%-0.2%
ROE12.1%2.1%7.6%7.5%5.8%-1.7%
Net Debt/EBITDA3.7x4.6x3.7x4.1x4.5x0.4x

Peers in Textiles


Below we provide Raymond benchmarking against other companies in Textiles 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
Olympia Industries ($OLYMPTX)-58.0%-96.6%74,809.1%1,749.9%-
Shri Dinesh Mills ($SHRIDINE)5.0%5.1%-76.5%304.9%-
Santaram Spinners ($SANTASPN)6.0%60.7%-40.9%112.0%-
Asahi Industries ($ASAHIIND)36.2%23.0%24.4%103.9%-
Blue Chip Tex Industries ($BLUECHIPT)-12.9%29.9%56.1%23.7%
 
Median (73 companies)4.5%9.3%14.4%-0.5%12.8%
Raymond ($RAYMOND)-11.7%11.8%17.3%4.9%


Top companies by EBITDA margin, %

Top 5 FY2012 FY2013 FY2014 FY2015 FY2016
Sil Investments ($SILINV)---93.8%-
Swadeshi Polytex ($SWADPOL)---64.4%-
Binny ($BINNY)---60.9%-
Ruby Mills ($RUBYMILLS)28.3%25.1%28.6%29.3%-
Premier Synthetics ($PREMSYN)---25.9%-
 
Median (84 companies)6.3%9.5%9.5%7.2%6.9%
Raymond ($RAYMOND)12.6%9.2%11.0%8.0%7.8%


Top companies by CAPEX/Revenue, %

Top 5 FY2012 FY2013 FY2014 FY2015 FY2016
Nitin Spinners ($NITINSPIN)1.9%2.6%8.0%42.3%-
Maharaja Shree Umaid Mills ($MAHASHR)18.6%24.1%6.8%16.8%-
Jindal Worldwide ($JINDWORLD)3.0%10.5%20.7%11.6%-
SRF ($SRF)0.0%18.7%20.0%11.4%-
Welspun India ($WELSPUNIND)5.6%7.8%16.4%10.9%17.7%
 
Median (20 companies)3.0%5.9%7.4%6.7%17.7%
Raymond ($RAYMOND)6.8%5.2%2.8%4.3%6.2%


Top companies by ROIC, %

Top 5 FY2012 FY2013 FY2014 FY2015 FY2016
Welspun India ($WELSPUNIND)9.3%15.6%8.5%21.9%25.2%
Maharaja Shree Umaid Mills ($MAHASHR)-0.5%9.2%8.3%20.4%-
Nitin Spinners ($NITINSPIN)6.0%19.5%21.5%17.5%-
Sutlej Textiles & Industries ($SUTLEJTEX)9.5%13.6%19.8%14.6%-
Arvind ($ARVIND)11.3%11.2%13.7%13.2%-
 
Median (126 companies)3.5%9.3%9.3%9.6%25.2%
Raymond ($RAYMOND)10.2%5.9%9.2%7.6%7.4%


Top companies by Net Debt / EBITDA

Top 5 FY2012 FY2013 FY2014 FY2015 FY2016
Bombay Rayon Fashions ($BRFL)4.9x4.9x11.6x10.0x-
Ruby Mills ($RUBYMILLS)12.6x15.3x10.8x8.6x-
Dcm ($DCM)13.5x3.5x3.7x5.5x-
Nahar Spinning Mills ($NAHARSPING)70.8x3.8x3.2x4.9x-
Rai Saheb Rekhchand Mohota Spg.& Wvg.Mills ($RAIREKMOH)10.0x0.0x0.0x4.6x-
 
Median (69 companies)3.8x3.2x0.0x0.0x1.6x
Raymond ($RAYMOND)3.7x4.6x3.7x4.1x4.5x


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