Ceat reports 133% CAPEX growth in 2016 and 0.66% Revenue decline
27-04-2016 • About Ceat (
$CEATLTD) • By InTwits
Ceat reported FY2016 financial results today. Here are the key drivers of the company's long term financial model:
- EBITDA Margin is expanding: 16.0% in FY2016 vs. 13.7% in FY2015 vs. 6.1% in FY2012
- EBITDA Margin is quite volatile: 16.0% in FY2016, 13.7% in FY2015, 11.9% in FY2014, 9.0% in FY2013, 6.1% in FY2012
- Ceat has medium CAPEX intensity: 5 year average CAPEX/Revenue was 5.0%. At the same time it's in pair with industry average of 6.2%
- CAPEX is quite volatile: ₹7,056m in FY2016, ₹3,028m in FY2015, ₹1,478m in FY2014, ₹848m in FY2013, ₹1,444m in FY2012
- The company has highly profitable business model: ROIC is 29.0%
- It operates with high leverage: Net Debt/EBITDA is 0.6x while industry average is 0.2x
Below you can find a comprehensive analysis of the key data driving the company's performance and the stock price.
Revenue and profitability
Ceat's Revenue decreased slightly on 0.66%. Revenue decline was accelerating on average at -6.2 pp per annum in the last 5 years. Despite revenue decline the EBITDA margin expanded. EBITDA Margin increased on 2.3 pp from 13.7% to 16.0% in FY2016. EBITDA Margin followed a growing trend at 2.5 pp per annum in FY2012-FY2016.
SG&A as a % of Revenue showed almost no change in FY2016.
Net Income margin increased on 2.3 pp from 5.5% to 7.8% in FY2016. Net Income margin stuck to a growing trend at 1.8 pp per annum in FY2012-FY2016.
Investments (CAPEX, working capital and M&A)
The company's CAPEX/Revenue was 12.3% in FY2016. CAPEX/Revenue jumped on 10.7 pp from 1.7% in FY2013 to 12.3% in FY2016. It's average level of CAPEX/Revenue for the last three years was 6.8%. Battling declining revenue Ceat invested a large share of EBITDA (77.0%) to CAPEX but that didn't help at least in this year. During FY2012-FY2016 CAPEX as a % of Revenue bottomed in FY2013 at 1.7% and was growing since that time.
Return on investment
The company operates at high and attractive ROIC (29.0%) and ROE (23.8%). ROIC showed almost no change in FY2016. ROE showed almost no change in FY2016. ROIC followed a growing trend at 4.5 pp per annum in the last 5 years.
Leverage (Debt)
Company's Net Debt / EBITDA is 0.6x and Debt / EBITDA is 0.7x. Net Debt / EBITDA dropped on 0.2x from 0.8x to 0.6x in FY2016. Debt dropped on 13.5% while cash dropped on 14.3%. Net Debt/EBITDA declined at -0.9x per annum in the last 5 years.
Ceat has no short term refinancing risk: cash is higher than short term debt (130.6%).
Financial and operational results
Ceat ($CEATLTD) key annual financial indicators| mln. INR | 2012 | 2013 | 2014 | 2015 | 2016 | 2016/2015 |
|---|
P&L
|
|---|
| Revenue | 46,490 | 50,522 | 55,540 | 57,521 | 57,141 | -0.7% |
| SG&A | | | | 1,042 | 1,185 | 13.7% |
| EBITDA | 2,839 | 4,551 | 6,584 | 7,901 | 9,163 | 16.0% |
| Net Income | 181 | 1,202 | 2,712 | 3,172 | 4,465 | 40.8% |
Balance Sheet
|
|---|
| Cash | 269 | 978 | 1,621 | 1,225 | 1,050 | -14.3% |
| Short Term Debt | 7,238 | 6,136 | 5,969 | 4,206 | 804 | -80.9% |
| Long Term Debt | 5,716 | 4,240 | 4,233 | 3,544 | 5,900 | 66.4% |
Cash flow
|
|---|
| Capex | 1,444 | 848 | 1,478 | 3,028 | 7,056 | 133.0% |
Ratios
|
|---|
| Revenue growth | 28.0% | 8.7% | 9.9% | 3.6% | -0.7% | |
| EBITDA growth | 71.5% | 60.3% | 44.7% | 20.0% | 16.0% | |
|
|---|
| EBITDA Margin | 6.1% | 9.0% | 11.9% | 13.7% | 16.0% | 2.3% |
| SG&A, % of revenue | | | | 1.8% | 2.1% | 0.3% |
| Net Income Margin | 0.4% | 2.4% | 4.9% | 5.5% | 7.8% | 2.3% |
| CAPEX, % of revenue | 3.1% | 1.7% | 2.7% | 5.3% | 12.3% | 7.1% |
|
|---|
| ROIC | 11.4% | 19.1% | 27.6% | 28.8% | 29.0% | 0.3% |
| ROE | 2.7% | 16.4% | 29.9% | 23.4% | 23.8% | 0.4% |
| Net Debt/EBITDA | 4.5x | 2.1x | 1.3x | 0.8x | 0.6x | -0.2x |
Peers in Auto Tyres & Rubber Products
Below we provide Ceat benchmarking against other companies in Auto Tyres & Rubber Products 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 |
|---|
| Rubfila International ($RUBFILA) | 20.9% | 4.7% | 25.1% | 28.7% | - |
| Balkrishna Industries ($BALKRISIND) | 41.5% | 12.5% | 11.1% | 1.2% | - |
| Pix Transmissions ($PIXTRANS) | -5.8% | 12.3% | -14.1% | -3.6% | - |
| Apollo Tyres ($APOLLOTYRE) | 37.1% | 5.3% | 4.0% | -4.4% | - |
| Goodyear India ($GOODYEAR) | -2.1% | 5.9% | 0.7% | -8.0% | - |
| |
|---|
| Median (5 companies) | 20.9% | 5.9% | 4.0% | -3.6% | - |
|---|
| Ceat ($CEATLTD) | - | 8.7% | 9.9% | 3.6% | -0.7% |
Top companies by EBITDA margin, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Balkrishna Industries ($BALKRISIND) | 17.0% | 20.1% | 26.0% | 19.1% | - |
| Pix Transmissions ($PIXTRANS) | 20.4% | 21.7% | 16.9% | 18.1% | - |
| Multibase India ($MULTIBASE) | - | - | - | 17.0% | - |
| Apollo Tyres ($APOLLOTYRE) | 9.7% | 11.4% | 14.2% | 15.2% | - |
| Rubfila International ($RUBFILA) | 12.3% | 14.9% | 12.6% | 13.5% | - |
| |
|---|
| Median (7 companies) | 14.6% | 14.9% | 14.2% | 15.2% | - |
|---|
| Ceat ($CEATLTD) | 6.1% | 9.0% | 11.9% | 13.7% | 16.0% |
Top companies by CAPEX/Revenue, %
| Top | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Balkrishna Industries ($BALKRISIND) | 23.4% | 29.9% | 23.5% | 9.7% | - |
| Apollo Tyres ($APOLLOTYRE) | 6.5% | 4.9% | 3.7% | 5.0% | - |
| Rubfila International ($RUBFILA) | 0.3% | 9.1% | 5.0% | 2.2% | - |
| Multibase India ($MULTIBASE) | - | - | - | 1.8% | - |
| |
|---|
| Median (4 companies) | 3.4% | 7.0% | 4.4% | 3.6% | - |
|---|
| Ceat ($CEATLTD) | 3.1% | 1.7% | 2.7% | 5.3% | 12.3% |
Top companies by ROIC, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Rubfila International ($RUBFILA) | 35.1% | 26.2% | 22.7% | 29.4% | - |
| Multibase India ($MULTIBASE) | 12.3% | 22.8% | 22.0% | 25.8% | - |
| Apollo Tyres ($APOLLOTYRE) | 14.7% | 16.8% | 23.6% | 23.9% | - |
| Balkrishna Industries ($BALKRISIND) | 17.7% | 17.3% | 19.7% | 10.4% | - |
| Falcon Tyres ($FALCONTQ) | 6.2% | - | - | - | - |
| |
|---|
| Median (8 companies) | 13.5% | 17.7% | 22.7% | 24.9% | - |
|---|
| Ceat ($CEATLTD) | 11.4% | 19.1% | 27.6% | 28.8% | 29.0% |
Top companies by Net Debt / EBITDA
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Balkrishna Industries ($BALKRISIND) | 3.2x | 3.2x | 2.5x | 2.6x | - |
| Apollo Tyres ($APOLLOTYRE) | 2.4x | 1.3x | 0.3x | 0.3x | - |
| Tirupati Foam ($TIRFOAM) | 6.4x | 5.4x | 0.0x | 0.0x | - |
| Goodyear India ($GOODYEAR) | - | -0.3x | -1.5x | 0.0x | - |
| Pix Transmissions ($PIXTRANS) | 4.8x | -0.6x | 0.0x | 0.0x | - |
| |
|---|
| Median (7 companies) | 3.2x | -0.1x | 0.0x | 0.0x | - |
|---|
| Ceat ($CEATLTD) | 4.5x | 2.1x | 1.3x | 0.8x | 0.6x |
