Kirloskar Ferrous Industries reports 18.4% revenue decline in FY2016 and 2.6 pp EBITDA Margin growth from 10.9% to 13.6%
29-04-2016 • About Kirloskar Ferrous Industries (
$KIRLFER) • By InTwits
Kirloskar Ferrous Industries reported FY2016 financial results today. Overall the company's long term financial model is characterised by the following facts:
- Kirloskar Ferrous Industries has medium CAPEX intensity: 5 year average CAPEX/Revenue was 6.5%. At the same time it's in pair with industry average of 7.9%
- CAPEX is quite volatile: ₹337m in FY2016, ₹584m in FY2015, ₹874m in FY2014, ₹1,593m in FY2013, ₹545m in FY2012
- The company has highly profitable business model: ROIC is 15.9%
Below you can find a comprehensive analysis of the key data driving the company's performance and the stock price.
Revenue and profitability
Kirloskar Ferrous Industries's Revenue dropped on 18.4%. Despite revenue decline the EBITDA margin expanded. EBITDA Margin increased on 2.6 pp from 10.9% to 13.6% in FY2016.
Net Income margin increased slightly on 1.6 pp from 3.6% to 5.2% in FY2016. During FY2012-FY2016 Net Income margin bottomed in FY2014 at 3.2% and was growing since that time.
Investments (CAPEX, working capital and M&A)
In FY2016 the company had CAPEX/Revenue of 3.0%. The company's CAPEX/Revenue dropped on 10.3 pp from 13.3% in FY2013 to 3.0% in FY2016. It's average CAPEX/Revenue for the last three years was 4.8%. During FY2012-FY2016 CAPEX as a % of Revenue topped in FY2013 at 13.3% and was declining since that time.
Return on investment
The company operates at good ROIC (15.9%) and ROE (12.2%). ROIC increased slightly on 1.2 pp from 14.7% to 15.9% in FY2016. ROE increased slightly on 1.0 pp from 11.2% to 12.2% in FY2016. During the last 5 years ROIC bottomed in FY2014 at 12.4% and was growing since that time. During FY2012-FY2016 ROE bottomed in FY2014 at 9.6% and was growing since that time.
Leverage (Debt)
Debt level is 0.7x Net Debt / EBITDA and 0.7x Debt / EBITDA. Net Debt / EBITDA dropped on 0.1x from 0.8x to 0.7x in FY2016. Debt dropped on 18.4% while cash dropped on 66.8%. During the last 5 years Net Debt/EBITDA topped in FY2014 at 1.6x and was declining since that time.
Kirloskar Ferrous Industries has short term refinancing risk: cash is only 2.5% of short term debt.
Valuation and dividends
Kirloskar Ferrous Industries's trades at EV/EBITDA 6.5x and P/E 15.1x while industy averages are 17.8x and 21.9x. The company's EV/(EBITDA-CAPEX) is 8.3x with the industry average at 22.8x.
Management team
Ravindranath Venkatesh Gumaste is a the company's CEO. Ravindranath Venkatesh Gumaste has spent 18 years with the company. R S Srivatsan is a the company's CFO. R S Srivatsan has spent 6 years at the company.
Financial and operational results
Kirloskar Ferrous Industries ($KIRLFER) key annual financial indicators| mln. INR | 2012 | 2013 | 2014 | 2015 | 2016 | 2016/2015 |
|---|
P&L
|
|---|
| Revenue | 10,897 | 11,981 | 12,322 | 13,651 | 11,139 | -18.4% |
| EBITDA | 1,128 | 1,259 | 1,151 | 1,492 | 1,512 | 1.3% |
| Net Income | 371 | 391 | 398 | 493 | 577 | 17.2% |
Balance Sheet
|
|---|
| Cash | 125 | 132 | 96 | 80 | 27 | -66.8% |
| Short Term Debt | 550 | 901 | 1,303 | 1,227 | 1,082 | -11.8% |
| Long Term Debt | 0 | 805 | 602 | 100 | 0 | -100.0% |
Cash flow
|
|---|
| Capex | 545 | 1,593 | 874 | 584 | 337 | -42.4% |
Ratios
|
|---|
| Revenue growth | -0.2% | 10.0% | 2.8% | 10.8% | -18.4% | |
| EBITDA growth | 9.3% | 11.6% | -8.6% | 29.6% | 1.3% | |
|
|---|
| EBITDA Margin | 10.4% | 10.5% | 9.3% | 10.9% | 13.6% | 2.6% |
| Net Income Margin | 3.4% | 3.3% | 3.2% | 3.6% | 5.2% | 1.6% |
| CAPEX, % of revenue | 5.0% | 13.3% | 7.1% | 4.3% | 3.0% | -1.3% |
|
|---|
| ROIC | 19.1% | 16.8% | 12.4% | 14.7% | 15.9% | 1.2% |
| ROE | 10.0% | 9.9% | 9.6% | 11.2% | 12.2% | 1.0% |
| Net Debt/EBITDA | 0.4x | 1.3x | 1.6x | 0.8x | 0.7x | -0.1x |
Peers in Iron & Steel/Interm.Products
Below you can find Kirloskar Ferrous Industries benchmarking vs. other companies in Iron & Steel/Interm.Products 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 |
|---|
| Uttam Galva Steels ($UTTAMSTL) | 12.0% | 11.0% | -13.2% | 55.0% | - |
| Modern Steels ($MDRNSTL) | -2.6% | -22.7% | 0.7% | 20.3% | - |
| Maithan Alloys ($MAITHANALL) | -1.5% | 59.1% | 1.1% | 15.0% | - |
| Pennar Industries ($PENIND) | 0.9% | -8.5% | 0.5% | 12.7% | - |
| Vaswani Industries ($VASWANI) | 51.4% | -2.1% | 5.6% | 12.6% | - |
| |
|---|
| Median (32 companies) | 14.6% | 3.2% | 3.4% | -1.6% | -15.4% |
|---|
| Kirloskar Ferrous Industries ($KIRLFER) | - | 10.0% | 2.8% | 10.8% | -18.4% |
Top companies by EBITDA margin, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Jindal Steel & Power ($JINDALSTEL) | 37.5% | 30.5% | 28.1% | 29.8% | - |
| Sarda Energy & Minerals ($SARDAEN) | 16.3% | 21.5% | 21.3% | 21.5% | - |
| Bhushan Steel ($BHUSANSTL) | 31.2% | 32.3% | 28.1% | 20.4% | - |
| Jsw Steel ($JSWSTEEL) | 17.8% | 17.1% | 17.9% | 17.7% | - |
| Tata Metaliks ($TATAMETALI) | -9.6% | 0.9% | 6.8% | 14.6% | 16.8% |
| |
|---|
| Median (29 companies) | 9.4% | 9.0% | 7.0% | 7.3% | 7.6% |
|---|
| Kirloskar Ferrous Industries ($KIRLFER) | 10.4% | 10.5% | 9.3% | 10.9% | 13.6% |
Top companies by CAPEX/Revenue, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Jindal Steel & Power ($JINDALSTEL) | 34.2% | 47.6% | 69.6% | 26.4% | - |
| Jayaswal Neco Industries ($JAYNECOIND) | 20.4% | 44.0% | 31.1% | 17.3% | - |
| Steel Authority Of India ($SAIL) | 20.9% | 20.7% | 19.3% | 16.9% | 17.3% |
| Bhushan Steel ($BHUSANSTL) | 47.2% | 44.0% | 50.4% | 16.2% | - |
| Jsw Steel ($JSWSTEEL) | 11.9% | 14.7% | 11.3% | 12.7% | - |
| |
|---|
| Median (17 companies) | 9.7% | 10.4% | 7.2% | 5.3% | 9.6% |
|---|
| Kirloskar Ferrous Industries ($KIRLFER) | 5.0% | 13.3% | 7.1% | 4.3% | 3.0% |
Top companies by ROIC, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Tata Metaliks ($TATAMETALI) | -23.5% | -3.7% | 19.9% | 57.4% | 42.6% |
| Pennar Industries ($PENIND) | 26.8% | 18.4% | 12.3% | 15.7% | - |
| Maithan Alloys ($MAITHANALL) | 16.3% | 15.1% | 5.5% | 15.3% | - |
| Gallantt Metal ($GALLANTT) | 8.7% | 11.7% | 8.5% | 11.7% | - |
| Sunflag Iron & Steel Co ($SUNFLAG) | 7.2% | 5.6% | 8.3% | 11.2% | - |
| |
|---|
| Median (40 companies) | 6.8% | 5.5% | 5.5% | 4.6% | 2.1% |
|---|
| Kirloskar Ferrous Industries ($KIRLFER) | 19.1% | 16.8% | 12.4% | 14.7% | 15.9% |
Top companies by Net Debt / EBITDA
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Visa Steel ($VISASTEEL) | 20.1x | - | 24.4x | 187.1x | - |
| Ismt ($ISMTLTD) | 5.3x | 9.8x | 19.9x | 48.3x | - |
| Kic Metaliks ($KAJARIR) | 9.2x | 3.0x | 18.2x | 19.8x | - |
| Bhushan Steel ($BHUSANSTL) | 6.3x | 8.6x | 12.9x | 17.7x | - |
| Prakash Industries ($PRAKASH) | 2.5x | 2.8x | 2.5x | 11.9x | - |
| |
|---|
| Median (26 companies) | 4.6x | 4.4x | 3.4x | 2.2x | 5.4x |
|---|
| Kirloskar Ferrous Industries ($KIRLFER) | 0.4x | 1.3x | 1.6x | 0.8x | 0.7x |
