Godrej Consumer Products reports 23.4% Net Income growth in 2016 and 1.5 pp EBITDA Margin growth from 16.6% to 18.1%
03-05-2016 • About Godrej Consumer Products (
$GODREJCP) • By InTwits
Godrej Consumer Products reported FY2016 financial results today. Here are the key drivers of the company's long term financial model:
- Godrej Consumer Products is a fast growth stock: FY2016 revenue growth was 8.7%, 5 year revenue CAGR was 19.5% at FY2016 ROIC 19.9%
- Godrej Consumer Products has low CAPEX intensity: 5 year average CAPEX/Revenue was 2.8%. At the same time it's in pair with industry average of 3.6%
- CAPEX is quite volatile: ₹2,811m in FY2016, ₹4,488m in FY2015, ₹9,924m in FY2014, ₹5,139m in FY2013, ₹6,186m in FY2012
- The company has highly profitable business model: ROIC is 19.9%
- It operates with high leverage: Net Debt/EBITDA is 1.4x while industry average is 0.1x
Below you can find a comprehensive analysis of the key data driving the company's performance and the stock price.
Revenue and profitability
Godrej Consumer Products's Revenue increased on 8.7%. Revenue decline was accelerating on average at -7.0 pp per annum in FY2012-FY2016. Revenue growth happened at the same time with EBITDA margin expansion. EBITDA Margin increased slightly on 1.5 pp from 16.6% to 18.1% in FY2016. During FY2012-FY2016 EBITDA Margin bottomed in FY2014 at 15.5% and was growing since that time.
Net Income margin increased slightly on 1.5 pp from 11.0% to 12.5% in FY2016. During the last 5 years Net Income margin bottomed in FY2014 at 10.0% and was growing since that time.
Investments (CAPEX, working capital and M&A)
In FY2016 Godrej Consumer Products had CAPEX/Revenue of 2.3%. CAPEX/Revenue decreased slightly on 1.8 pp from 4.1% in FY2013 to 2.3% in FY2016. It's average CAPEX/Revenue for the last three years was 2.2%.
Return on investment
The company operates at high and attractive ROE (23.8%) while ROIC is a bit lower (19.9%). ROIC increased slightly on 1.1 pp from 18.8% to 19.9% in FY2016. ROE increased slightly on 1.4 pp from 22.4% to 23.8% in FY2016. During FY2012-FY2016 ROIC bottomed in FY2013 at 17.4% and was growing since that time. During the last 5 years ROE bottomed in FY2014 at 21.4% and was growing since that time.
Leverage (Debt)
Company's Net Debt / EBITDA is 1.4x and Debt / EBITDA is 1.8x. Net Debt / EBITDA dropped on 0.3x from 1.7x to 1.4x in FY2016. Debt increased on 6.4% while cash jumped on 38.1%.
Godrej Consumer Products has no short term refinancing risk: cash is higher than short term debt (128.9%).
Valuation and dividends
The company's trades at EV/EBITDA 30.0x and P/E 41.5x while industy averages are 17.8x and 21.9x. Godrej Consumer Products's EV/(EBITDA-CAPEX) is 34.4x with the industry average at 22.8x.
Management team
Godrej Consumer Products's CFO V Srinivasan has spent 5 years with the company.
Financial and operational results
Godrej Consumer Products ($GODREJCP) key annual financial indicators| mln. INR | 2012 | 2013 | 2014 | 2015 | 2016 | 2016/2015 |
|---|
P&L
|
|---|
| Revenue | 48,509 | 63,908 | 75,826 | 82,422 | 89,572 | 8.7% |
| EBITDA | 8,759 | 10,152 | 11,771 | 13,686 | 16,242 | 18.7% |
| Net Income | 7,267 | 7,961 | 7,597 | 9,071 | 11,194 | 23.4% |
Balance Sheet
|
|---|
| Cash | 4,640 | 7,596 | 6,353 | 4,127 | 5,699 | 38.1% |
| Short Term Debt | 3,488 | 5,902 | 7,826 | 6,941 | 4,421 | -36.3% |
| Long Term Debt | 15,281 | 18,662 | 15,903 | 20,230 | 24,490 | 21.1% |
Cash flow
|
|---|
| Capex | 1,565 | 2,636 | 1,329 | 2,126 | 2,081 | -2.1% |
Ratios
|
|---|
| Revenue growth | 32.0% | 31.7% | 18.6% | 8.7% | 8.7% | |
| EBITDA growth | 34.1% | 15.9% | 16.0% | 16.3% | 18.7% | |
|
|---|
| EBITDA Margin | 18.1% | 15.9% | 15.5% | 16.6% | 18.1% | 1.5% |
| Net Income Margin | 15.0% | 12.5% | 10.0% | 11.0% | 12.5% | 1.5% |
| CAPEX, % of revenue | 3.2% | 4.1% | 1.8% | 2.6% | 2.3% | -0.3% |
|
|---|
| ROIC | 19.1% | 17.4% | 17.7% | 18.8% | 19.9% | 1.1% |
| ROE | 32.1% | 26.0% | 21.4% | 22.4% | 23.8% | 1.4% |
| Net Debt/EBITDA | 1.6x | 1.7x | 1.5x | 1.7x | 1.4x | -0.3x |
Peers in Personal Products
Below you can find Godrej Consumer Products benchmarking vs. other companies in Personal 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 |
|---|
| Bajaj Corp ($BAJAJCORP) | - | 28.2% | 10.7% | 22.9% | 6.2% |
| Marico ($MARICO) | - | 15.5% | 2.0% | 22.3% | 7.0% |
| 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 ($PGHH) | 29.4% | 29.9% | 21.5% | 13.9% | - |
| |
|---|
| Median (8 companies) | 17.4% | 17.2% | 9.6% | 15.4% | 7.0% |
|---|
| Godrej Consumer Products ($GODREJCP) | - | 31.7% | 18.6% | 8.7% | 8.7% |
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 ($PGHH) | 16.3% | 15.4% | 20.7% | 21.3% | - |
| |
|---|
| Median (10 companies) | 18.6% | 18.3% | 19.7% | 21.0% | 18.0% |
|---|
| Godrej Consumer Products ($GODREJCP) | 18.1% | 15.9% | 15.5% | 16.6% | 18.1% |
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 ($PGHH) | 4.2% | 2.2% | 7.2% | 3.4% | - |
| |
|---|
| Median (9 companies) | 4.2% | 4.4% | 5.4% | 3.4% | 1.9% |
|---|
| Godrej Consumer Products ($GODREJCP) | 3.2% | 4.1% | 1.8% | 2.6% | 2.3% |
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 ($PGHH) | 28.1% | 30.3% | 43.2% | 40.1% | - |
| |
|---|
| Median (10 companies) | 28.7% | 30.4% | 33.5% | 40.1% | 40.6% |
|---|
| Godrej Consumer Products ($GODREJCP) | 19.1% | 17.4% | 17.7% | 18.8% | 19.9% |
Top companies by Net Debt / EBITDA
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Bliss Gvs Pharma ($BLISSGVS) | 0.0x | 1.1x | 1.9x | 1.4x | - |
| Dabur India ($DABUR) | 0.8x | 1.2x | 0.3x | 0.5x | 0.4x |
| Marico ($MARICO) | 1.5x | 1.3x | 0.9x | 0.3x | 0.0x |
| Cupid ($CUPID) | 1.7x | 0.5x | 1.4x | -0.1x | - |
| Hindustan Unilever ($HINDUNILVR) | -0.3x | -0.1x | -0.2x | -0.2x | - |
| |
|---|
| Median (9 companies) | 0.2x | -0.0x | -0.2x | -0.2x | 0.0x |
|---|
| Godrej Consumer Products ($GODREJCP) | 1.6x | 1.7x | 1.5x | 1.7x | 1.4x |
