Adi Finechem reports 46.8% CAPEX decline in 2016 and 0.73% Revenue growth
29-04-2016 • About Adi Finechem (
$ADIFINCHM) • By InTwits
Adi Finechem reported FY2016 financial results today. Here are the key drivers of the company's long term financial model:
- Adi Finechem has high CAPEX intensity: 5 year average CAPEX/Revenue was 10.1%. At the same time it's a lot of higher than industry average of 5.3%.
- CAPEX is quite volatile: ₹136m in FY2016, ₹255m in FY2015, ₹191m in FY2014, ₹60m in FY2013, ₹71m in FY2012
- The company has highly profitable business model: ROIC is 20.6%
- It operates with high leverage: Net Debt/EBITDA is 1.4x 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 slightly on 0.73%. Revenue decline was accelerating on average at -16.5 pp per annum in FY2012-FY2016. Revenue growth was financed by EBITDA margin decline. EBITDA Margin decreased slightly on 1.2 pp from 16.5% to 15.3% in FY2016.
Net Income margin decreased on 2.1 pp from 9.1% to 7.0% in FY2016.
Investments (CAPEX, working capital and M&A)
In FY2016 the company had CAPEX/Revenue of 9.0%. Adi Finechem showed CAPEX/Revenue growth of 4.1 pp from 4.8% in FY2013 to 9.0% in FY2016. It's average level of CAPEX/Revenue for the last three years was 12.8%. Adi Finechem maintained rich investment policy and has spent a big chunk of EBITDA (58.5%) to CAPEX.
Return on investment
The company operates at high and attractive ROIC (20.6%) while ROE is a bit lower (17.7%). ROIC decreased on 5.8 pp from 26.3% to 20.6% in FY2016. ROE decreased on 8.6 pp from 26.3% to 17.7% in FY2016.
Leverage (Debt)
Debt level is 1.4x Net Debt / EBITDA and 1.5x Debt / EBITDA. Net Debt / EBITDA surged on 0.3x from 1.1x to 1.4x in FY2016. Debt surged on 17.0% while cash surged on 47.4%. During the last 5 years Net Debt/EBITDA bottomed in FY2014 at 0.9x and was growing since that time.
Adi Finechem has short term refinancing risk: cash is only 1.1% of short term debt.
Valuation and dividends
The company's trades at EV/EBITDA 16.9x and P/E 33.9x while industy averages are 17.8x and 21.9x. Adi Finechem's EV/(EBITDA-CAPEX) is 40.8x with the industry average at 22.8x.
Financial and operational results
Adi Finechem ($ADIFINCHM) key annual financial indicators| mln. INR | 2012 | 2013 | 2014 | 2015 | 2016 | 2016/2015 |
|---|
P&L
|
|---|
| Revenue | 972 | 1,231 | 1,518 | 1,506 | 1,517 | 0.7% |
| EBITDA | 147 | 173 | 335 | 249 | 232 | -6.8% |
| Net Income | 74 | 84 | 187 | 137 | 106 | -22.6% |
Balance Sheet
|
|---|
| Cash | 1 | 1 | 1 | 2 | 2 | 47.4% |
| Short Term Debt | 149 | 127 | 220 | 149 | 221 | 48.9% |
| Long Term Debt | 62 | 54 | 70 | 139 | 115 | -17.1% |
Cash flow
|
|---|
| Capex | 71 | 60 | 191 | 255 | 136 | -46.8% |
Ratios
|
|---|
| Revenue growth | 69.4% | 26.7% | 23.3% | -0.8% | 0.7% | |
| EBITDA growth | 40.2% | 17.8% | 93.8% | -25.7% | -6.8% | |
|
|---|
| EBITDA Margin | 15.1% | 14.0% | 22.1% | 16.5% | 15.3% | -1.2% |
| Net Income Margin | 7.6% | 6.8% | 12.3% | 9.1% | 7.0% | -2.1% |
| CAPEX, % of revenue | 7.3% | 4.8% | 12.6% | 16.9% | 9.0% | -8.0% |
|
|---|
| ROIC | 30.6% | 29.8% | 46.4% | 26.3% | 20.6% | -5.8% |
| ROE | 35.8% | 30.7% | 47.8% | 26.3% | 17.7% | -8.6% |
| Net Debt/EBITDA | 1.4x | 1.0x | 0.9x | 1.1x | 1.4x | 0.3x |
Peers in Specialty Chemicals
Below we provide Adi Finechem benchmarking against other companies in Specialty Chemicals 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 |
|---|
| Kiri Industries ($KIRIINDUS) | 7.9% | -86.5% | 24.8% | 34.7% | - |
| Vidhi Dyestuffs Manufacturing ($VIDHIDYE) | 14.1% | 4.7% | 19.5% | 30.0% | - |
| Keltech Energies ($KELENRG) | 60.2% | -13.4% | -0.4% | 24.4% | - |
| Dai-Ichi Karkaria ($DAICHI) | 20.7% | 31.4% | 45.4% | 22.8% | - |
| Nitta Gelatin India ($NITTAGELA) | 21.2% | 27.8% | -5.5% | 21.2% | - |
| |
|---|
| Median (27 companies) | 19.8% | 11.4% | 11.3% | 10.9% | - |
|---|
| Adi Finechem ($ADIFINCHM) | - | 26.7% | 23.3% | -0.8% | 0.7% |
Top companies by EBITDA margin, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Vinati Organics ($VINATIORGA) | 21.7% | 21.8% | 22.7% | 24.9% | - |
| Indian Toners & Developers ($INDTONER) | - | - | - | 22.6% | - |
| Solar Industries India ($SOLARINDS) | 18.5% | 17.5% | 17.9% | 19.3% | - |
| Anil ($ANILLTD) | 18.1% | 16.9% | 17.1% | 17.4% | - |
| Ultramarine & Pigments ($ULTRAMAR) | 18.0% | 15.5% | 17.4% | 17.2% | - |
| |
|---|
| Median (32 companies) | 10.6% | 11.2% | 10.6% | 10.5% | - |
|---|
| Adi Finechem ($ADIFINCHM) | 15.1% | 14.0% | 22.1% | 16.5% | 15.3% |
Top companies by CAPEX/Revenue, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Anil ($ANILLTD) | - | 6.7% | 5.2% | 11.5% | - |
| Solar Industries India ($SOLARINDS) | 13.0% | 9.9% | 12.3% | 10.3% | - |
| Pidilite Industries ($PIDILITIND) | 5.2% | 2.9% | 4.4% | 8.5% | - |
| Oricon Enterprises ($ORICON) | 10.2% | 6.2% | 4.7% | 7.9% | - |
| Vinati Organics ($VINATIORGA) | 13.6% | 28.2% | 4.2% | 7.4% | - |
| |
|---|
| Median (16 companies) | 4.9% | 4.5% | 4.3% | 4.9% | - |
|---|
| Adi Finechem ($ADIFINCHM) | 7.3% | 4.8% | 12.6% | 16.9% | 9.0% |
Top companies by ROIC, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Vinati Organics ($VINATIORGA) | 29.6% | 26.2% | 30.6% | 34.8% | - |
| Camlin Fine Sciences ($CAMLINFIN) | 11.1% | 17.8% | 24.2% | 29.5% | - |
| Pidilite Industries ($PIDILITIND) | 27.4% | 29.3% | 29.8% | 29.0% | - |
| Ultramarine & Pigments ($ULTRAMAR) | 20.0% | 16.3% | 20.8% | 25.7% | - |
| Plastiblends India ($PLASTIBLEN) | 18.3% | 15.8% | 24.0% | 24.5% | - |
| |
|---|
| Median (35 companies) | 14.7% | 14.8% | 11.2% | 16.7% | - |
|---|
| Adi Finechem ($ADIFINCHM) | 30.6% | 29.8% | 46.4% | 26.3% | 20.6% |
Top companies by Net Debt / EBITDA
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Kiri Industries ($KIRIINDUS) | 8.2x | 31.3x | 10.6x | 7.7x | - |
| Jayant Agro-Organics ($JAYAGROGN) | 2.8x | 3.1x | 4.6x | 6.5x | - |
| Anil ($ANILLTD) | 2.2x | 3.4x | 3.8x | 4.0x | - |
| Oricon Enterprises ($ORICON) | 1.2x | 1.0x | 1.7x | 3.2x | - |
| Sudarshan Chemical Industries ($SUDARSCHEM) | 2.4x | 5.1x | 3.2x | 3.2x | - |
| |
|---|
| Median (30 companies) | 1.5x | 1.7x | 1.7x | 0.0x | 0.0x |
|---|
| Adi Finechem ($ADIFINCHM) | 1.4x | 1.0x | 0.9x | 1.1x | 1.4x |
