Steel Strips Wheels CAPEX surged on 121% and Revenue increased on 2.5%
28-04-2016 • About Steel Strips Wheels (
$SSWL) • By InTwits
Steel Strips Wheels reported FY2016 financial results today. Here are the key drivers of the company's long term financial model:
- Steel Strips Wheels has medium CAPEX intensity: 5 year average CAPEX/Revenue was 8.9%. At the same time it's a lot of higher than industry average of 5.8%.
- CAPEX is quite volatile: ₹1,145m in FY2016, ₹517m in FY2015, ₹616m in FY2014, ₹1,109m in FY2013, ₹1,272m in FY2012
- The company has business model with low profitability: ROIC is 10.0%
- It operates with high leverage: Net Debt/EBITDA is 4.2x while industry average is 1.3x
Below you can find a comprehensive analysis of the key data driving the company's performance and the stock price.
Revenue and profitability
Steel Strips Wheels's Revenue increased on 2.5%. Revenue decline was accompanies by EBITDA margin decline. EBITDA Margin decreased on 5.4 pp from 26.7% to 21.3% in FY2016.
Net Income margin increased slightly on 1.8 pp from 3.4% to 5.2% in FY2016. During the last 5 years Net Income margin bottomed in FY2014 at 2.3% and was growing since that time.
Investments (CAPEX, working capital and M&A)
Steel Strips Wheels's CAPEX/Revenue was 9.7% in FY2016. The company showed small CAPEX/Revenue decline of 1.7 pp from 11.4% in FY2013 to 9.7% in FY2016. It's average level of CAPEX/Revenue for the last three years was 6.7%. Steel Strips Wheels invested a large share of EBITDA (75.0%) to CAPEX. During the last 5 years CAPEX as a % of Revenue bottomed in FY2015 at 4.5%.
Return on investment
The company operates at good ROE (14.3%) while ROIC is low (10.0%). ROIC increased on 3.3 pp from 6.7% to 10.0% in FY2016. ROE increased on 3.9 pp from 10.3% to 14.3% in FY2016. During FY2012-FY2016 ROIC bottomed in FY2014 at 4.6% and was growing since that time. During the last 5 years ROE bottomed in FY2014 at 6.9% and was growing since that time.
Leverage (Debt)
Company's Net Debt / EBITDA is 4.2x and Debt / EBITDA is 4.4x. Net Debt / EBITDA dropped on 1.4x from 5.6x to 4.2x in FY2016. Debt increased on 9.8% while cash jumped on 129%. During the last 5 years Net Debt/EBITDA topped in FY2014 at 6.5x and was declining since that time.
Steel Strips Wheels has short term refinancing risk: cash is only 9.1% of short term debt.
Valuation and dividends
The company's trades at EV/EBITDA 8.3x and P/E 10.3x while industy averages are 17.8x and 21.9x. Steel Strips Wheels's EV/(EBITDA-CAPEX) is 33.2x with the industry average at 22.8x.
Financial and operational results
Steel Strips Wheels ($SSWL) key annual financial indicators| mln. INR | 2012 | 2013 | 2014 | 2015 | 2016 | 2016/2015 |
|---|
P&L
|
|---|
| Revenue | 9,572 | 9,699 | 10,638 | 11,528 | 11,819 | 2.5% |
| EBITDA | 919 | 950 | 995 | 1,076 | 1,527 | 41.9% |
| Net Income | 288 | 250 | 243 | 394 | 612 | 55.3% |
Balance Sheet
|
|---|
| Cash | 77 | 179 | 124 | 159 | 363 | 128.5% |
| Short Term Debt | 2,292 | 3,265 | 3,275 | 3,282 | 3,981 | 21.3% |
| Long Term Debt | 2,757 | 2,855 | 3,303 | 2,852 | 2,755 | -3.4% |
Cash flow
|
|---|
| Capex | 1,272 | 1,109 | 616 | 517 | 1,145 | 121.5% |
Ratios
|
|---|
| Revenue growth | 45.9% | 1.3% | 9.7% | 8.4% | 2.5% | |
| EBITDA growth | 5.4% | 3.4% | 4.7% | 8.2% | 41.9% | |
|
|---|
| EBITDA Margin | 9.6% | 9.8% | 9.3% | 9.3% | 12.9% | 3.6% |
| Net Income Margin | 3.0% | 2.6% | 2.3% | 3.4% | 5.2% | 1.8% |
| CAPEX, % of revenue | 13.3% | 11.4% | 5.8% | 4.5% | 9.7% | 5.2% |
|
|---|
| ROIC | 6.4% | 5.0% | 4.6% | 6.7% | 10.0% | 3.3% |
| ROE | 9.7% | 7.7% | 6.9% | 10.3% | 14.3% | 3.9% |
| Net Debt/EBITDA | 5.4x | 6.3x | 6.5x | 5.6x | 4.2x | -1.4x |
Peers in Auto Parts & Equipment
Below you can find Steel Strips Wheels benchmarking vs. other companies in Auto Parts & Equipment 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 |
|---|
| Spectra Industries ($SPECTRA) | 16.4% | 40.2% | -10.1% | 57.1% | - |
| India Nippon Electricals ($INDNIPPON) | 13.6% | 3.2% | -2.4% | 24.8% | - |
| Amara Raja Batteries ($AMARAJABAT) | 34.3% | 25.1% | 16.1% | 22.6% | - |
| Enkei Wheels (India) ($ENKEIWHEL) | 16.9% | 1.3% | 11.7% | 21.6% | - |
| Ip Rings ($IPRINGLTD) | 4.0% | 2.4% | -0.1% | 19.5% | - |
| |
|---|
| Median (36 companies) | 17.6% | 2.7% | 4.9% | 8.7% | -0.6% |
|---|
| Steel Strips Wheels ($SSWL) | - | 1.3% | 9.7% | 8.4% | 2.5% |
Top companies by EBITDA margin, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Ist ($ISTLTD) | - | - | - | 71.6% | - |
| Tube Investments Of India ($TUBEINVEST) | 18.4% | 24.4% | 28.3% | 30.0% | - |
| Shivam Autotech ($SHIVAMAUTO) | 24.1% | 24.1% | 20.6% | 18.7% | - |
| Amara Raja Batteries ($AMARAJABAT) | 14.9% | 15.7% | 14.2% | 17.0% | - |
| Suprajit Engineering ($SUPRAJIT) | 16.2% | 17.0% | 17.2% | 16.2% | - |
| |
|---|
| Median (42 companies) | 11.1% | 9.9% | 10.8% | 10.3% | 15.3% |
|---|
| Steel Strips Wheels ($SSWL) | 9.6% | 9.8% | 9.3% | 9.3% | 12.9% |
Top companies by CAPEX/Revenue, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Amtek Auto ($AMTEKAUTO) | 18.9% | - | 27.1% | 30.3% | - |
| Jbm Auto ($JBMA) | 9.8% | 8.4% | - | 14.4% | - |
| Rico Auto Industries ($RICOAUTO) | 5.8% | 10.9% | 5.7% | 14.2% | - |
| Shivam Autotech ($SHIVAMAUTO) | 11.6% | 4.1% | 4.9% | 12.5% | - |
| Amara Raja Batteries ($AMARAJABAT) | 3.7% | 2.5% | 10.9% | 9.6% | - |
| |
|---|
| Median (25 companies) | 5.6% | 4.5% | 4.8% | 4.7% | 5.5% |
|---|
| Steel Strips Wheels ($SSWL) | 13.3% | 11.4% | 5.8% | 4.5% | 9.7% |
Top companies by ROIC, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Amara Raja Batteries ($AMARAJABAT) | 32.1% | 34.5% | 30.3% | 35.4% | - |
| Exide Industries ($EXIDEIND) | 24.2% | 24.3% | 29.5% | 26.9% | 20.5% |
| Munjal Showa ($MUNJALSHOW) | 29.9% | 23.8% | 22.5% | 24.9% | - |
| Motherson Sumi Systems ($MOTHERSUMI) | 13.5% | 16.5% | 25.0% | 24.9% | - |
| Gabriel India ($GABRIEL) | 19.9% | 15.5% | 18.0% | 24.0% | - |
| |
|---|
| Median (48 companies) | 16.4% | 12.7% | 14.5% | 14.6% | 12.9% |
|---|
| Steel Strips Wheels ($SSWL) | 6.4% | 5.0% | 4.6% | 6.7% | 10.0% |
Top companies by Net Debt / EBITDA
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Tube Investments Of India ($TUBEINVEST) | 17.6x | 17.8x | 17.3x | 16.4x | - |
| Amtek Auto ($AMTEKAUTO) | 4.8x | - | 5.3x | 5.8x | - |
| Remsons Industries ($REMSONSIND) | 2.8x | 4.3x | 3.6x | 5.7x | - |
| Ucal Fuel Systems ($UCALFUEL) | 4.3x | 5.6x | 5.7x | 3.6x | - |
| Subros ($SUBROS) | 3.1x | 2.8x | 3.1x | 3.1x | - |
| |
|---|
| Median (40 companies) | 1.2x | 1.8x | 0.7x | 0.0x | -1.0x |
|---|
| Steel Strips Wheels ($SSWL) | 5.4x | 6.3x | 6.5x | 5.6x | 4.2x |
