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Marico reports 26.4% Net Income growth in 2016 and 2.0 pp EBITDA Margin growth from 15.4% to 17.4%

29-04-2016 • About Marico ($MARICO) • By InTwits

Marico reported FY2016 financial results today. Here are the key drivers of the company's long term financial model:
  • Marico is a growth stock: FY2016 revenue growth was 7.0%, 5 year revenue CAGR was 14.4% at FY2016 ROIC 40.6%
  • Marico has medium CAPEX intensity: 5 year average CAPEX/Revenue was 5.7%. At the same time it's a lot of higher than industry average of 3.7%.
  • CAPEX is quite volatile: ₹1,007m in FY2016, ₹591m in FY2015, ₹774m in FY2014, ₹9,915m in FY2013, ₹1,021m in FY2012
  • The company has highly profitable business model: ROIC is 40.6%
Below you can find a comprehensive analysis of the key data driving the company's performance and the stock price.

Revenue and profitability


Marico's Revenue increased on 7.0%. Despite revenue decline the EBITDA margin expanded. EBITDA Margin increased on 2.3 pp from 13.7% to 16.0% in FY2016. EBITDA Margin followed a growing trend at 1.2 pp per annum in FY2012-FY2016.

Net Income margin increased slightly on 1.8 pp from 10.0% to 11.8% in FY2016. Net Income margin stuck to a growing trend at 0.91 pp per annum in FY2012-FY2016.

Investments (CAPEX, working capital and M&A)


In FY2016 Marico had CAPEX/Revenue of 1.6%. CAPEX/Revenue dropped on 19.9 pp from 21.6% in FY2013 to 1.6% in FY2016. Average CAPEX/Revenue for the last three years was 1.4%.

Return on investment


The company operates at high and attractive ROIC (40.6%) and ROE (37.0%). ROIC increased on 4.5 pp from 36.1% to 40.6% in FY2016. ROE increased slightly on 0.96 pp from 36.0% to 37.0% in FY2016. ROIC grew at 4.8 pp per annum in FY2012-FY2016. During FY2012-FY2016 ROE bottomed in FY2013 at 25.3% and was growing since that time.

Leverage (Debt)


Company's Net Debt / EBITDA is 0.0x and Debt / EBITDA is 0.3x. Net Debt / EBITDA dropped on 0.2x from 0.3x to 0.033x in FY2016. Debt dropped on 20.3% while cash jumped on 51.1%. Net Debt/EBITDA declined at -0.4x per annum in FY2012-FY2016.

Marico has short term refinancing risk: cash is only 89.8% of short term debt.

Management team


Marico's CEO is Saugata Gupta. Saugata Gupta has 7 years tenure with the company. Marico's CFO Vivek Karve has spent 6 years with the company.

Financial and operational results


Marico ($MARICO) key annual financial indicators

mln. INR201220132014201520162016/2015
P&L
Revenue39,79745,96246,86557,33061,3207.0%
SG&A7,861
EBITDA4,8646,3687,5918,82810,67520.9%
Net Income3,1713,9594,8545,7357,24826.4%
Balance Sheet
Cash4844972612,0473,09351.1%
Short Term Debt3,9414,3924,2832,6363,44230.6%
Long Term Debt3,9074,3262,5151,6874-99.8%
Cash flow
Capex1,0219,9157745911,00770.6%
Ratios
Revenue growth26.9%15.5%2.0%22.3%7.0%
EBITDA growth16.2%30.9%19.2%16.3%20.9%
EBITDA Margin12.2%13.9%16.2%15.4%17.4%2.0%
SG&A, % of revenue12.8%
Net Income Margin8.0%8.6%10.4%10.0%11.8%1.8%
CAPEX, % of revenue2.6%21.6%1.7%1.0%1.6%0.6%
ROIC23.2%22.6%26.9%36.1%40.6%4.5%
ROE30.8%25.3%29.0%36.0%37.0%1.0%
Net Debt/EBITDA1.5x1.3x0.9x0.3x0.0x-0.2x

Peers in Personal Products


Below we provide Marico benchmarking against other companies in Personal Products 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
Bajaj Corp ($BAJAJCORP)-28.2%10.7%22.9%6.2%
Emami ($EMAMILTD)16.6%16.9%7.2%21.8%-
Bliss Gvs Pharma ($BLISSGVS)-48.5%-13.1%17.0%-
Procter & Gamble Hygiene & Health Care ($PGHH)29.4%29.9%21.5%13.9%-
Colgate-Palmolive (India) ($COLPAL)17.8%17.5%13.1%11.3%-
 
Median (8 companies)17.8%22.8%11.9%12.6%7.1%
Marico ($MARICO)-15.5%2.0%22.3%7.0%


Top companies by EBITDA margin, %

Top 5 FY2012 FY2013 FY2014 FY2015 FY2016
Bajaj Corp ($BAJAJCORP)24.6%28.4%27.7%29.0%31.2%
Cupid ($CUPID)---28.9%-
Bliss Gvs Pharma ($BLISSGVS)27.2%28.1%20.9%25.7%-
Emami ($EMAMILTD)20.9%20.5%24.3%25.0%-
Procter & Gamble Hygiene & Health Care ($PGHH)16.3%15.4%20.7%21.3%-
 
Median (10 companies)19.5%18.3%19.7%21.0%24.6%
Marico ($MARICO)12.2%13.9%16.2%15.4%17.4%


Top companies by CAPEX/Revenue, %

Top 5 FY2012 FY2013 FY2014 FY2015 FY2016
Colgate-Palmolive (India) ($COLPAL)3.8%4.9%9.0%7.5%-
Bliss Gvs Pharma ($BLISSGVS)8.7%5.0%16.7%7.0%-
Emami ($EMAMILTD)8.0%5.0%3.6%5.0%-
Dabur India ($DABUR)4.4%3.9%3.0%3.4%2.6%
Procter & Gamble Hygiene & Health Care ($PGHH)4.2%2.2%7.2%3.4%-
 
Median (9 companies)4.2%4.0%5.4%3.4%2.3%
Marico ($MARICO)2.6%21.6%1.7%1.0%1.6%


Top companies by ROIC, %

Top 5 FY2012 FY2013 FY2014 FY2015 FY2016
Hindustan Unilever ($HINDUNILVR)99.9%114.4%133.0%133.9%-
Colgate-Palmolive (India) ($COLPAL)121.4%120.4%104.4%99.9%-
Bajaj Corp ($BAJAJCORP)-36.9%36.2%46.5%54.8%
Emami ($EMAMILTD)31.5%36.7%43.3%45.4%-
Procter & Gamble Hygiene & Health Care ($PGHH)28.1%30.3%43.2%40.1%-
 
Median (10 companies)28.7%30.4%33.5%40.1%42.1%
Marico ($MARICO)23.2%22.6%26.9%36.1%40.6%


Top companies by Net Debt / EBITDA

Top 5 FY2012 FY2013 FY2014 FY2015 FY2016
Godrej Consumer Products ($GODREJCP)1.6x1.7x1.5x1.7x-
Bliss Gvs Pharma ($BLISSGVS)0.0x1.1x1.9x1.4x-
Dabur India ($DABUR)0.8x1.2x0.3x0.5x0.4x
Cupid ($CUPID)1.7x0.5x1.4x-0.1x-
Hindustan Unilever ($HINDUNILVR)-0.3x-0.1x-0.2x-0.2x-
 
Median (9 companies)0.2x-0.0x-0.2x-0.2x0.1x
Marico ($MARICO)1.5x1.3x0.9x0.3x0.0x


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