Shriram City Union Finance Debt jumped on 19.6% and EBITDA increased on 2.1%
27-04-2016 • About Shriram City Union Finance (
$SHRIRAMCIT) • By InTwits
Shriram City Union Finance reported FY2016 financial results today. Overall the company's long term financial model is characterised by the following facts:
- Shriram City Union Finance is a fast growth stock: FY2016 revenue growth was 10.9%, 5 year revenue CAGR was 24.8% at FY2016 ROIC 4.6%
- EBITDA Margin is declining: 57.7% in FY2016 vs. 62.7% in FY2015 vs. 71.1% in FY2012
- Shriram City Union Finance has low CAPEX intensity: 5 year average CAPEX/Revenue was 1.4%. At the same time it's in pair with industry average of 1.5%
- CAPEX is quite volatile: ₹27,443m in FY2016, ₹42,082m in FY2015, ₹61,635m in FY2014, ₹84,070m in FY2013, ₹61,211m in FY2012
- The company has potentially unprofitable business model: ROIC is 4.6%
- It operates with high leverage: Net Debt/EBITDA is 6.4x while industry average is 2.8x
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 surged on 10.9%. During FY2012-FY2016 Revenue growth bottomed in FY2014 at 5.6% and was accelerating since that time. Despite revenue decline the EBITDA margin expanded. EBITDA Margin increased on 8.1 pp from 19.1% to 27.2% in FY2016. EBITDA Margin declined at -3.2 pp per annum in the last 5 years.
Net Income margin decreased on 2.0 pp from 15.8% to 13.8% in FY2016.
Investments (CAPEX, working capital and M&A)
In FY2016 the company had CAPEX/Revenue of 1.0%. Shriram City Union Finance's CAPEX/Revenue decreased slightly on 0.96 pp from 2.0% in FY2013 to 1.0% in FY2016. Average CAPEX/Revenue for the last three years was 1.1%.
Return on investment
The company operates at good ROE (12.5%) while ROIC is low (4.6%). ROIC decreased slightly on 1.1 pp from 5.7% to 4.6% in FY2016. ROE decreased on 3.4 pp from 15.8% to 12.5% in FY2016. ROIC pursued a declining trend in the last 5 years. ROE followed a declining trend at -2.8 pp per annum in the last 5 years.
Leverage (Debt)
Debt level is 6.4x Net Debt / EBITDA and 6.6x Debt / EBITDA. Net Debt / EBITDA jumped on 1.0x from 5.5x to 6.4x in FY2016. Debt surged on 19.6% while cash increased on 2.3%. During the last 5 years Net Debt/EBITDA bottomed in FY2014 at 5.0x and was growing since that time.
Shriram City Union Finance has short term refinancing risk: cash is only 7.6% of short term debt.
Valuation and dividends
The company's trades at EV/EBITDA 11.1x and P/E 19.5x while industy averages are 17.8x and 21.9x. The company's EV/(EBITDA-CAPEX) is 11.3x with the industry average at 22.8x.
Management team
Shriram City Union Finance's CEO is Duruvasan Ramachandra. Duruvasan Ramachandra has 8 years tenure with the company.
Financial and operational results
Shriram City Union Finance ($SHRIRAMCIT) key annual financial indicators| mln. INR | 2012 | 2013 | 2014 | 2015 | 2016 | 2016/2015 |
|---|
P&L
|
|---|
| Revenue | 20,567 | 30,996 | 32,728 | 36,096 | 40,028 | 10.9% |
| EBITDA | 14,615 | 21,011 | 21,711 | 22,631 | 23,108 | 2.1% |
| Net Income | 3,381 | 4,494 | 5,322 | 5,714 | 5,521 | -3.4% |
Balance Sheet
|
|---|
| Cash | 9,592 | 17,685 | 11,741 | 3,905 | 3,994 | 2.3% |
| Short Term Debt | 33,082 | 44,528 | 31,188 | 46,744 | 52,489 | 12.3% |
| Long Term Debt | 63,140 | 82,759 | 89,304 | 80,897 | 100,127 | 23.8% |
Cash flow
|
|---|
| Capex | 376 | 620 | 343 | 427 | 418 | -2.1% |
Ratios
|
|---|
| Revenue growth | 55.4% | 50.7% | 5.6% | 10.3% | 10.9% | |
| EBITDA growth | 58.9% | 43.8% | 3.3% | 4.2% | 2.1% | |
|
|---|
| EBITDA Margin | 71.1% | 67.8% | 66.3% | 62.7% | 57.7% | -5.0% |
| Net Income Margin | 16.4% | 14.5% | 16.3% | 15.8% | 13.8% | -2.0% |
| CAPEX, % of revenue | 1.8% | 2.0% | 1.0% | 1.2% | 1.0% | -0.1% |
|
|---|
| ROIC | 6.1% | 5.8% | 5.8% | 5.7% | 4.6% | -1.1% |
| ROE | 23.0% | 22.4% | 20.1% | 15.8% | 12.5% | -3.4% |
| Net Debt/EBITDA | 5.9x | 5.2x | 5.0x | 5.5x | 6.4x | 1.0x |
Peers in Finance (including NBFCs)
Below you can find Shriram City Union Finance benchmarking vs. other companies in Finance (including NBFCs) industry. It's shown for the period of 5 years for the key financial metrics. Each table has median value for all the companies in the industry together with individual financial data of the top-5 companies in the industry by particular financial metric.
Top companies by Revenue growth, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Fortune Financial Services (India) ($FORTUNEF) | -11.7% | -24.9% | -7.1% | 188.4% | - |
| Motilal Oswal Financial Services ($MOTILALOFS) | -21.6% | 0.4% | -0.9% | 64.7% | - |
| Sks Microfinance ($SKSMICRO) | -62.8% | -25.6% | 55.0% | 47.3% | - |
| Bajaj Holdings & Investment ($BAJAJHLDNG) | - | 12.8% | 25.9% | 27.0% | -12.2% |
| Bajaj Finserv ($BAJAJFINSV) | 59.7% | 28.1% | 18.8% | 26.8% | - |
| |
|---|
| Median (23 companies) | 21.8% | 24.4% | 20.8% | 14.3% | 8.8% |
|---|
| Shriram City Union Finance ($SHRIRAMCIT) | - | 50.7% | 5.6% | 10.3% | 10.9% |
Top companies by EBITDA margin, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Microse India ($MICROSE) | - | - | - | 101.1% | - |
| Pnb Gilts ($PNBGILTS) | 94.0% | 96.4% | 96.4% | 96.1% | - |
| Jsw Holdings ($JSWHL) | - | - | - | 93.8% | - |
| Rural Electrification Corporation ($RECLTD) | 97.2% | 97.3% | 96.7% | 93.3% | - |
| Bajaj Holdings & Investment ($BAJAJHLDNG) | 96.1% | 95.4% | 92.3% | 92.7% | 91.4% |
| |
|---|
| Median (48 companies) | 64.8% | 65.4% | 65.5% | 49.0% | 62.7% |
|---|
| Shriram City Union Finance ($SHRIRAMCIT) | 71.1% | 67.8% | 66.3% | 62.7% | 57.7% |
Top companies by CAPEX/Revenue, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Fortune Financial Services (India) ($FORTUNEF) | 1.0% | 1.3% | 4.5% | 7.3% | - |
| Clarus Finance & Securities ($CLARUS) | - | - | 6.9% | 5.8% | - |
| Srei Infrastructure Finance ($SREINFRA) | 30.2% | 8.5% | 12.3% | 5.4% | - |
| Motilal Oswal Financial Services ($MOTILALOFS) | 15.5% | 5.3% | 1.7% | 3.4% | - |
| Bengal & Assam Company ($BENGALASM) | 15.9% | 4.5% | 1.2% | 2.1% | - |
| |
|---|
| Median (21 companies) | 0.6% | 0.7% | 1.0% | 0.7% | 0.4% |
|---|
| Shriram City Union Finance ($SHRIRAMCIT) | 1.8% | 2.0% | 1.0% | 1.2% | 1.0% |
Top companies by ROIC, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Motilal Oswal Financial Services ($MOTILALOFS) | - | 12.0% | 9.7% | 11.9% | - |
| Sks Microfinance ($SKSMICRO) | - | - | 4.1% | 6.6% | - |
| Rural Electrification Corporation ($RECLTD) | - | 4.7% | 5.2% | 4.7% | - |
| Mahindra & Mahindra Financial Services ($M&MFIN) | 6.4% | 6.3% | 5.3% | 4.2% | 3.2% |
| Bajaj Holdings & Investment ($BAJAJHLDNG) | 3.6% | 3.4% | 3.5% | 3.9% | 3.0% |
| |
|---|
| Median (52 companies) | 3.6% | 4.4% | 3.8% | 3.9% | 3.1% |
|---|
| Shriram City Union Finance ($SHRIRAMCIT) | 6.1% | 5.8% | 5.8% | 5.7% | 4.6% |
Top companies by Net Debt / EBITDA
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Fortune Financial Services (India) ($FORTUNEF) | 9.0x | - | 10.8x | 8.9x | - |
| Pnb Gilts ($PNBGILTS) | 14.2x | 11.2x | 11.3x | 8.8x | - |
| Srei Infrastructure Finance ($SREINFRA) | 7.0x | 6.2x | 7.5x | 8.0x | - |
| Rural Electrification Corporation ($RECLTD) | 8.3x | 8.0x | 7.5x | 8.0x | - |
| Magma Fincorp ($MAGMA) | 7.7x | 8.5x | 7.0x | 7.7x | - |
| |
|---|
| Median (44 companies) | 4.4x | 3.6x | 2.9x | 0.0x | 6.5x |
|---|
| Shriram City Union Finance ($SHRIRAMCIT) | 5.9x | 5.2x | 5.0x | 5.5x | 6.4x |
