Sqs India Bfsi Net Income jumped on 70.4% while EBITDA Margin decreased slightly on 1.0 pp from 19.4% to 18.4%
28-04-2016 • About Sqs India Bfsi (
$SQSBFSI) • By InTwits
Sqs India Bfsi reported FY2016 financial results today. Overall the company's long term financial model is characterised by the following facts:
- Sqs India Bfsi is a fast growth stock: FY2016 revenue growth was 23.4%, 5 year revenue CAGR was 26.1% at FY2016 ROIC 39.9%
- Sqs India Bfsi has low CAPEX intensity: 5 year average CAPEX/Revenue was 4.4%. At the same time it's a lot of higher than industry average of 3.5%.
- CAPEX is quite volatile: ₹31m in FY2016, ₹28m in FY2015, ₹25m in FY2014, ₹251m in FY2013, ₹35m in FY2012
- The company has highly profitable business model: ROIC is 39.9%
Below you can find a comprehensive analysis of the key data driving the company's performance and the stock price.
Revenue and profitability
Sqs India Bfsi's Revenue surged on 23.4%. During FY2012-FY2016 Revenue growth bottomed in FY2015 at 10.1%. Revenue decline was accompanies by EBITDA margin decline. EBITDA Margin decreased slightly on 1.8 pp from 10.4% to 8.6% in FY2016. During FY2012-FY2016 EBITDA Margin topped in FY2014 at 20.5% and was declining since that time.
Net Income margin increased on 3.9 pp from 10.1% to 14.0% in FY2016.
Investments (CAPEX, working capital and M&A)
The company's CAPEX/Revenue was 1.2% in FY2016. The company showed big decline in CAPEX/Revenue of 14.3 pp from 15.5% in FY2013 to 1.2% in FY2016. For the last three years the average CAPEX/Revenue was 1.3%.
Return on investment
The company operates at high and attractive ROIC (39.9%) and ROE (35.0%). ROIC increased on 9.2 pp from 30.6% to 39.9% in FY2016. ROE surged on 14.4 pp from 20.6% to 35.0% in FY2016. ROIC followed a growing trend at 5.9 pp per annum in the last 5 years.
Leverage (Debt)
The company paid down all the debt in FY2016. Cash jumped on 53.8%.
Valuation and dividends
Sqs India Bfsi's trades at EV/EBITDA 18.5x and P/E 26.7x while industy averages are 17.8x and 21.9x. The company's EV/(EBITDA-CAPEX) is 19.8x with the industry average at 22.8x.
Financial and operational results
Sqs India Bfsi ($SQSBFSI) key annual financial indicators| mln. INR | 2012 | 2013 | 2014 | 2015 | 2016 | 2016/2015 |
|---|
P&L
|
|---|
| Revenue | 1,214 | 1,614 | 1,944 | 2,142 | 2,642 | 23.4% |
| EBITDA | 129 | 303 | 399 | 416 | 486 | 16.8% |
| Net Income | 114 | 194 | 300 | 216 | 369 | 70.4% |
Balance Sheet
|
|---|
| Cash | 235 | 293 | 395 | 555 | 854 | 53.8% |
| Short Term Debt | 0 | 29 | 23 | 23 | 0 | -100.0% |
| Long Term Debt | 0 | 114 | 96 | 73 | 0 | -100.0% |
Cash flow
|
|---|
| Capex | 35 | 251 | 25 | 28 | 31 | 12.0% |
Ratios
|
|---|
| Revenue growth | 46.4% | 32.9% | 20.4% | 10.1% | 23.4% | |
| EBITDA growth | 354.8% | 135.2% | 31.6% | 4.3% | 16.8% | |
|
|---|
| EBITDA Margin | 10.6% | 18.8% | 20.5% | 19.4% | 18.4% | -1.0% |
| Net Income Margin | 9.4% | 12.0% | 15.4% | 10.1% | 14.0% | 3.9% |
| CAPEX, % of revenue | 2.9% | 15.5% | 1.3% | 1.3% | 1.2% | -0.1% |
|
|---|
| ROIC | 12.1% | 27.0% | 29.4% | 30.6% | 39.9% | 9.2% |
| ROE | 15.6% | 23.7% | 30.6% | 20.6% | 35.0% | 14.4% |
| Net Debt/EBITDA | -1.8x | -0.5x | -0.7x | -1.1x | -1.8x | -0.7x |
Peers in IT Consulting & Software
Below we provide Sqs India Bfsi 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 ($TECHM) | 6.8% | 25.2% | 174.0% | 20.1% | - |
| |
|---|
| Median (22 companies) | 13.6% | 20.4% | 13.5% | 7.2% | 13.0% |
|---|
| Sqs India Bfsi ($SQSBFSI) | - | 32.9% | 20.4% | 10.1% | 23.4% |
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 ($MINDTREE) | 15.1% | 19.8% | 20.6% | 20.3% | 17.7% |
| |
|---|
| Median (25 companies) | 15.1% | 16.5% | 18.3% | 12.3% | 13.6% |
|---|
| Sqs India Bfsi ($SQSBFSI) | 10.6% | 18.8% | 20.5% | 19.4% | 18.4% |
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 ($TECHM) | 5.4% | 2.6% | 5.0% | 5.0% | - |
| |
|---|
| Median (20 companies) | 3.9% | 3.2% | 3.5% | 3.1% | 3.6% |
|---|
| Sqs India Bfsi ($SQSBFSI) | 2.9% | 15.5% | 1.3% | 1.3% | 1.2% |
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 ($MINDTREE) | 24.9% | 34.6% | 36.2% | 32.0% | 28.9% |
| Tech Mahindra ($TECHM) | 15.4% | 20.1% | 43.0% | 29.7% | - |
| Cmc ($CMC) | 26.2% | 33.2% | 35.3% | 26.0% | - |
| |
|---|
| Median (30 companies) | 19.6% | 20.4% | 22.9% | 20.6% | 18.8% |
|---|
| Sqs India Bfsi ($SQSBFSI) | 12.1% | 27.0% | 29.4% | 30.6% | 39.9% |
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 | -0.3x |
| Mphasis ($MPHASIS) | -0.1x | 0.2x | - | 0.2x | - |
| |
|---|
| Median (23 companies) | -0.0x | -0.2x | -0.2x | -0.2x | -0.3x |
|---|
| Sqs India Bfsi ($SQSBFSI) | -1.8x | -0.5x | -0.7x | -1.1x | -1.8x |
