Jindal Steel & Power Net Debt / EBITDA surged on 7.2x from 7.7x to 14.9x in 2016 and Debt increased on 2.9%
04-05-2016 • About Jindal Steel & Power (
$JINDALSTEL) • By InTwits
Jindal Steel & Power reported FY2016 financial results today. Here are the key drivers of the company's long term financial model:
- Jindal Steel & Power has high CAPEX intensity: 5 year average CAPEX/Revenue was 39.9%. At the same time it's a lot of higher than industry average of 7.7%.
- CAPEX is quite volatile: ₹39,500m in FY2016, ₹51,012m in FY2015, ₹134,184m in FY2014, ₹94,313m in FY2013, ₹62,214m in FY2012
- The company has potentially unprofitable business model: ROIC is 0.4%
- It operates with high leverage: Net Debt/EBITDA is 14.9x while industry average is 12.8x
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 decreased on 6.5%. Revenue decline was worsened by EBITDA margin decline. EBITDA Margin dropped on 12.6 pp from 29.8% to 17.2% in FY2016. EBITDA Margin followed a declining trend at -4.2 pp per annum in the last 5 years.
Net Income margin decreased on 3.9 pp from -6.6% to -10.5% in FY2016. Net Income margin declined at -8.6 pp per annum in the last 5 years.
Investments (CAPEX, working capital and M&A)
Jindal Steel & Power's CAPEX/Revenue was 21.8% in FY2016. The company showed big decline in CAPEX/Revenue of 25.8 pp from 47.6% in FY2013 to 21.8% in FY2016. Average CAPEX/Revenue for the last three years was 39.2%. Battling declining revenue Jindal Steel & Power made large investments to CAPEX (127% of EBITDA) but that didn't help at least in this year. During the last 5 years CAPEX as a % of Revenue topped in FY2014 at 69.6% and was declining since that time.
Return on investment
The company operates at low but positive ROIC (0.4%) and negative ROE (-9.7%). ROIC decreased on 4.2 pp from 4.6% to 0.42% in FY2016. ROE decreased on 3.9 pp from -5.9% to -9.7% in FY2016. ROIC declined at -3.4 pp per annum in the last 5 years. ROE stuck to a declining trend at -8.9 pp per annum in the last 5 years.
Leverage (Debt)
Debt level is 14.9x Net Debt / EBITDA and 15.1x Debt / EBITDA. Net Debt / EBITDA jumped on 7.2x from 7.7x to 14.9x in FY2016. Debt increased on 2.9% while cash dropped on 45.9%. Net Debt/EBITDA grew at 2.8x per annum in FY2012-FY2016.
Jindal Steel & Power has short term refinancing risk: cash is only 5.8% of short term debt.
Management team
The company's CEO Ravi K Uppal has spent 8 years with the company.
Financial and operational results
Jindal Steel & Power ($JINDALSTEL) key annual financial indicators| mln. INR | 2012 | 2013 | 2014 | 2015 | 2016 | 2016/2015 |
|---|
P&L
|
|---|
| Revenue | 182,086 | 198,068 | 192,863 | 193,591 | 181,049 | -6.5% |
| EBITDA | 68,306 | 60,485 | 54,259 | 57,601 | 31,057 | -46.1% |
| Net Income | 39,649 | 29,101 | 19,104 | -12,781 | -19,020 | |
Balance Sheet
|
|---|
| Cash | 1,327 | 1,878 | 9,498 | 11,290 | 6,111 | -45.9% |
| Short Term Debt | 59,112 | 92,165 | 106,319 | 101,045 | 104,547 | 3.5% |
| Long Term Debt | 111,796 | 154,016 | 259,003 | 353,996 | 363,617 | 2.7% |
Cash flow
|
|---|
| Capex | 62,214 | 94,313 | 134,184 | 51,012 | 39,500 | -22.6% |
Ratios
|
|---|
| Revenue growth | 38.9% | 8.8% | -2.6% | 0.4% | -6.5% | |
| EBITDA growth | 7.9% | -11.4% | -10.3% | 6.2% | -46.1% | |
|
|---|
| EBITDA Margin | 37.5% | 30.5% | 28.1% | 29.8% | 17.2% | -12.6% |
| Net Income Margin | 21.8% | 14.7% | 9.9% | -6.6% | -10.5% | -3.9% |
| CAPEX, % of revenue | 34.2% | 47.6% | 69.6% | 26.4% | 21.8% | -4.5% |
|
|---|
| ROIC | 14.9% | 9.7% | 6.3% | 4.6% | 0.4% | -4.2% |
| ROE | 24.6% | 14.8% | 8.7% | -5.9% | -9.7% | -3.9% |
| Net Debt/EBITDA | 2.5x | 4.0x | 6.6x | 7.7x | 14.9x | 7.2x |
Peers in Iron & Steel/Interm.Products
Below you can find Jindal Steel & Power 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 ($VASWANI) | 51.4% | -2.1% | 5.6% | 12.6% | - |
| |
|---|
| Median (32 companies) | 14.6% | 3.2% | 3.4% | -1.6% | -18.4% |
|---|
| Jindal Steel & Power ($JINDALSTEL) | - | 8.8% | -2.6% | 0.4% | -6.5% |
Top companies by EBITDA margin, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| 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% |
| Jai Corp ($JAICORPLTD) | 14.1% | 16.3% | 16.0% | 12.7% | - |
| |
|---|
| Median (29 companies) | 9.4% | 9.0% | 7.0% | 7.3% | 13.6% |
|---|
| Jindal Steel & Power ($JINDALSTEL) | 37.5% | 30.5% | 28.1% | 29.8% | 17.2% |
Top companies by CAPEX/Revenue, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| 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% | - |
| Tata Steel ($TATASTEEL) | 9.1% | 11.6% | 11.1% | 9.8% | 9.6% |
| |
|---|
| Median (17 companies) | 7.5% | 10.4% | 6.6% | 4.4% | 7.9% |
|---|
| Jindal Steel & Power ($JINDALSTEL) | 34.2% | 47.6% | 69.6% | 26.4% | 21.8% |
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 ($MAITHANALL) | 16.3% | 15.1% | 5.5% | 15.3% | - |
| Kirloskar Ferrous Industries ($KIRLFER) | 19.1% | 16.8% | 12.4% | 14.7% | 15.9% |
| Gallantt Metal ($GALLANTT) | 8.7% | 11.7% | 8.5% | 11.7% | - |
| |
|---|
| Median (40 companies) | 6.8% | 5.5% | 5.5% | 5.4% | 9.0% |
|---|
| Jindal Steel & Power ($JINDALSTEL) | 14.9% | 9.7% | 6.3% | 4.6% | 0.4% |
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 ($PRAKASH) | 2.5x | 2.8x | 2.5x | 11.9x | - |
| |
|---|
| Median (26 companies) | 4.6x | 4.4x | 3.2x | 1.7x | 0.7x |
|---|
| Jindal Steel & Power ($JINDALSTEL) | 2.5x | 4.0x | 6.6x | 7.7x | 14.9x |
