Sks Microfinance EBITDA jumped on 85.9% and Revenue surged on 64.5%
04-05-2016 • About Sks Microfinance (
$SKSMICRO) • By InTwits
Sks Microfinance reported FY2016 financial results today. Here are the key drivers of the company's long term financial model:
- EBITDA Margin is expanding: 67.1% in FY2016 vs. 59.4% in FY2015 vs. -240.3% in FY2012
- Sks Microfinance has low CAPEX intensity: 5 year average CAPEX/Revenue was 0.7%.
- The company has business model with low profitability: ROIC is 7.6%
- It operates with high leverage: Net Debt/EBITDA is 3.9x while industry average is 2.9x
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 jumped on 64.5%. Revenue decline was slowing down on average by 32.7 pp per annum in FY2012-FY2016. Revenue decline was accompanies by EBITDA margin decline. EBITDA Margin decreased slightly on 0.79 pp from 12.9% to 12.1% in FY2016. EBITDA Margin grew at 71.6 pp per annum in the last 5 years.
Net Income margin showed almost no change in FY2016. During the last 5 years Net Income margin topped in FY2015 at 23.4%.
Investments (CAPEX, working capital and M&A)
Sks Microfinance's CAPEX/Revenue was 1.1% in FY2016. The company showed small growth in CAPEX/Revenue of 0.90 pp from 0.23% in FY2013 to 1.1% in FY2016. Average CAPEX/Revenue for the last three years was 0.82%.
Return on investment
The company operates at good ROE (24.9%) while ROIC is low (7.6%). ROIC increased slightly on 0.97 pp from 6.6% to 7.6% in FY2016. ROE showed almost no change in FY2016. ROE stuck to a growing trend at 39.3 pp per annum in FY2012-FY2016.
Leverage (Debt)
Company's Net Debt / EBITDA is 3.9x and Debt / EBITDA is 5.8x. Net Debt / EBITDA increased on 0.1x from 3.9x to 3.9x in FY2016. Debt jumped on 56.4% while cash jumped on 15.5%.
Sks Microfinance has short term refinancing risk: cash is only 58.0% of short term debt.
Valuation and dividends
The company's trades at EV/EBITDA 12.5x and P/E 25.0x while industy averages are 17.8x and 21.9x.
Management team
Ashish Damani is a Sks Microfinance's CFO. Ashish Damani has spent 6 years at the company.
Financial and operational results
Sks Microfinance ($SKSMICRO) key annual financial indicators| mln. INR | 2012 | 2013 | 2014 | 2015 | 2016 | 2016/2015 |
|---|
P&L
|
|---|
| Revenue | 4,722 | 3,515 | 5,446 | 8,025 | 13,197 | 64.5% |
| EBITDA | -11,345 | -1,486 | 2,879 | 4,766 | 8,858 | 85.9% |
| Net Income | -13,606 | -2,971 | 699 | 1,877 | 3,030 | 61.4% |
Balance Sheet
|
|---|
| Cash | 4,521 | 6,583 | 4,152 | 14,375 | 16,603 | 15.5% |
| Short Term Debt | 7,360 | 13,528 | 12,311 | 22,226 | 28,609 | 28.7% |
| Long Term Debt | 2,846 | 2,656 | 3,002 | 10,572 | 22,687 | 114.6% |
Cash flow
|
|---|
| Capex | 27 | 8 | 41 | 48 | 149 | 211.6% |
Ratios
|
|---|
| Revenue growth | -62.8% | -25.6% | 55.0% | 47.3% | 64.5% | |
| EBITDA growth | -292.6% | -86.9% | -293.7% | 65.5% | 85.9% | |
|
|---|
| EBITDA Margin | -240.3% | -42.3% | 52.9% | 59.4% | 67.1% | 7.7% |
| Net Income Margin | -288.1% | -84.5% | 12.8% | 23.4% | 23.0% | -0.4% |
| CAPEX, % of revenue | 0.6% | 0.2% | 0.7% | 0.6% | 1.1% | 0.5% |
|
|---|
| ROIC | | | 4.1% | 6.6% | 7.6% | 1.0% |
| ROE | -123.1% | -72.4% | 16.4% | 24.9% | 24.9% | 0.0% |
| Net Debt/EBITDA | | | 3.9x | 3.9x | 3.9x | 0.1x |
Peers in Finance (including NBFCs)
Below you can find Sks Microfinance benchmarking vs. other companies in Finance (including NBFCs) 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 |
|---|
| Fortune Financial Services (India) ($FORTUNEF) | -11.7% | -24.9% | -7.1% | 188.4% | - |
| Motilal Oswal Financial Services ($MOTILALOFS) | - | 0.4% | -0.9% | 64.7% | 39.8% |
| Bajaj Holdings & Investment ($BAJAJHLDNG) | - | 12.8% | 25.9% | 27.0% | -12.2% |
| Bajaj Finserv ($BAJAJFINSV) | 59.7% | 28.1% | 18.8% | 26.8% | - |
| Master Trust ($MASTERTR) | 10.2% | -0.0% | -5.3% | 26.0% | - |
| |
|---|
| Median (23 companies) | 23.2% | 27.4% | 19.8% | 13.3% | 11.6% |
|---|
| Sks Microfinance ($SKSMICRO) | - | -25.6% | 55.0% | 47.3% | 64.5% |
Top companies by EBITDA margin, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Microse India ($MICROSE) | - | - | - | 101.1% | - |
| Pnb Gilts ($PNBGILTS) | 94.0% | 96.4% | 96.4% | 96.1% | - |
| Jsw Holdings ($JSWHL) | - | - | - | 93.8% | - |
| Rural Electrification Corporation ($RECLTD) | 97.2% | 97.3% | 96.7% | 93.3% | - |
| Bajaj Holdings & Investment ($BAJAJHLDNG) | 96.1% | 95.4% | 92.3% | 92.7% | 91.4% |
| |
|---|
| Median (48 companies) | 70.0% | 67.8% | 66.4% | 49.0% | 64.8% |
|---|
| Sks Microfinance ($SKSMICRO) | -240.3% | -42.3% | 52.9% | 59.4% | 67.1% |
Top companies by CAPEX/Revenue, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Fortune Financial Services (India) ($FORTUNEF) | 1.0% | 1.3% | 4.5% | 7.3% | - |
| Clarus Finance & Securities ($CLARUS) | - | - | 6.9% | 5.8% | - |
| Srei Infrastructure Finance ($SREINFRA) | 30.2% | 8.5% | 12.3% | 5.4% | - |
| Motilal Oswal Financial Services ($MOTILALOFS) | 15.5% | 5.3% | 1.7% | 3.4% | 2.5% |
| Bengal & Assam Company ($BENGALASM) | 15.9% | 4.5% | 1.2% | 2.1% | - |
| |
|---|
| Median (21 companies) | 1.0% | 0.8% | 1.1% | 0.7% | 0.9% |
|---|
| Sks Microfinance ($SKSMICRO) | 0.6% | 0.2% | 0.7% | 0.6% | 1.1% |
Top companies by ROIC, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Motilal Oswal Financial Services ($MOTILALOFS) | - | 12.0% | 9.7% | 11.9% | 7.8% |
| Shriram City Union Finance ($SHRIRAMCIT) | 6.1% | 5.8% | 5.8% | 5.7% | 4.6% |
| Rural Electrification Corporation ($RECLTD) | - | 4.7% | 5.2% | 4.7% | - |
| Mahindra & Mahindra Financial Services ($M&MFIN) | 6.4% | 6.3% | 5.3% | 4.2% | 3.2% |
| Bajaj Holdings & Investment ($BAJAJHLDNG) | 3.6% | 3.4% | 3.5% | 3.9% | 3.0% |
| |
|---|
| Median (52 companies) | 4.1% | 4.6% | 3.9% | 3.9% | 3.8% |
|---|
| Sks Microfinance ($SKSMICRO) | - | - | 4.1% | 6.6% | 7.6% |
Top companies by Net Debt / EBITDA
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Fortune Financial Services (India) ($FORTUNEF) | 9.0x | - | 10.8x | 8.9x | - |
| Pnb Gilts ($PNBGILTS) | 14.2x | 11.2x | 11.3x | 8.8x | - |
| Srei Infrastructure Finance ($SREINFRA) | 7.0x | 6.2x | 7.5x | 8.0x | - |
| Rural Electrification Corporation ($RECLTD) | 8.3x | 8.0x | 7.5x | 8.0x | - |
| Magma Fincorp ($MAGMA) | 7.7x | 8.5x | 7.0x | 7.7x | - |
| |
|---|
| Median (44 companies) | 4.7x | 3.6x | 2.9x | 0.0x | 5.9x |
|---|
| Sks Microfinance ($SKSMICRO) | - | - | 3.9x | 3.9x | 3.9x |
