Emami reports 1,555% CAPEX growth in 2016 and 18.3% Revenue growth
05-05-2016 • About Emami (
$EMAMILTD) • By InTwits
Emami reported FY2016 financial results today. Overall the company's long term financial model is characterised by the following facts:
- Emami is a fast growth stock: FY2016 revenue growth was 18.3%, 5 year revenue CAGR was 16.0% at FY2016 ROIC 25.1%
- EBITDA Margin is expanding: 26.1% in FY2016 vs. 25.0% in FY2015 vs. 20.9% in FY2012
- Emami has high CAPEX intensity: 5 year average CAPEX/Revenue was 18.2%. At the same time it's a lot of higher than industry average of 10.1%.
- CAPEX is quite volatile: ₹18,171m in FY2016, ₹1,098m in FY2015, ₹654m in FY2014, ₹852m in FY2013, ₹1,156m in FY2012
- The company has highly profitable business model: ROIC is 25.1%
- It operates with high leverage: Net Debt/EBITDA is 0.8x while industry average is 0.2x
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 surged on 18.3%. Revenue growth happened at the same time with EBITDA margin expansion. EBITDA Margin increased slightly on 1.1 pp from 25.0% to 26.1% in FY2016. EBITDA Margin followed a growing trend at 1.5 pp per annum in the last 5 years.
Net Income margin decreased on 8.2 pp from 21.9% to 13.7% in FY2016. During the last 5 years Net Income margin topped in FY2014 at 22.1% and was declining since that time.
Investments (CAPEX, working capital and M&A)
Emami's CAPEX/Revenue was 69.3% in FY2016. The company's CAPEX/Revenue jumped on 64.2 pp from 5.0% in FY2013 to 69.3% in FY2016. It's average level of CAPEX/Revenue for the last three years was 25.9%. To secure its fast growth Emami made large investments to CAPEX (265% of EBITDA). During the last 5 years CAPEX as a % of Revenue bottomed in FY2014 at 3.6% and was growing since that time.
Return on investment
The company operates at high and attractive ROIC (25.1%) and ROE (27.3%). ROIC dropped on 20.4 pp from 45.4% to 25.1% in FY2016. ROE dropped on 17.6 pp from 44.9% to 27.3% in FY2016. During FY2012-FY2016 ROIC topped in FY2015 at 45.4%. During the last 5 years ROE topped in FY2014 at 47.1% and was declining since that time.
Leverage (Debt)
Debt level is 0.8x Net Debt / EBITDA and 1.0x Debt / EBITDA. Net Debt / EBITDA surged on 1.4x from -0.6x to 0.8x in FY2016. Debt surged on 1,771% while cash dropped on 69.6%. During FY2012-FY2016 Net Debt/EBITDA bottomed in FY2015 at -0.6x.
Emami has short term refinancing risk: cash is only 28.9% of short term debt.
Valuation and dividends
The company's trades at EV/EBITDA 33.1x and P/E 61.6x while industy averages are 17.8x and 21.9x.
Financial and operational results
Emami ($EMAMILTD) key annual financial indicators| mln. INR | 2012 | 2013 | 2014 | 2015 | 2016 | 2016/2015 |
|---|
P&L
|
|---|
| Revenue | 14,535 | 16,991 | 18,208 | 22,172 | 26,238 | 18.3% |
| SG&A | | | | | 5,307 | |
| EBITDA | 3,042 | 3,492 | 4,421 | 5,543 | 6,847 | 23.5% |
| Net Income | 2,588 | 3,147 | 4,025 | 4,856 | 3,591 | -26.1% |
Balance Sheet
|
|---|
| Cash | 134 | 2,813 | 2,685 | 3,531 | 1,073 | -69.6% |
| Short Term Debt | 1,031 | 866 | 202 | 342 | 3,714 | 986.8% |
| Long Term Debt | 527 | 282 | 174 | 17 | 3,000 | 17,459.3% |
Cash flow
|
|---|
| Capex | 1,156 | 852 | 654 | 1,098 | 18,171 | 1,555.2% |
Ratios
|
|---|
| Revenue growth | 16.6% | 16.9% | 7.2% | 21.8% | 18.3% | |
| EBITDA growth | 12.0% | 14.8% | 26.6% | 25.4% | 23.5% | |
|
|---|
| EBITDA Margin | 20.9% | 20.5% | 24.3% | 25.0% | 26.1% | 1.1% |
| SG&A, % of revenue | | | | | 20.2% | |
| Net Income Margin | 17.8% | 18.5% | 22.1% | 21.9% | 13.7% | -8.2% |
| CAPEX, % of revenue | 8.0% | 5.0% | 3.6% | 5.0% | 69.3% | 64.3% |
|
|---|
| ROIC | 31.5% | 36.7% | 43.3% | 45.4% | 25.1% | -20.4% |
| ROE | 37.1% | 42.4% | 47.1% | 44.9% | 27.3% | -17.6% |
| Net Debt/EBITDA | 0.5x | -0.5x | -0.5x | -0.6x | 0.8x | 1.4x |
Peers in Personal Products
Below you can find Emami 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% |
| 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) ($COLPAL) | 17.8% | 17.5% | 13.1% | 11.3% | - |
| |
|---|
| Median (8 companies) | 17.8% | 22.8% | 11.9% | 12.6% | 7.5% |
|---|
| Emami ($EMAMILTD) | - | 16.9% | 7.2% | 21.8% | 18.3% |
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 ($BLISSGVS) | 27.2% | 28.1% | 20.9% | 25.7% | - |
| Procter & Gamble Hygiene & Health Care ($PGHH) | 16.3% | 15.4% | 20.7% | 21.3% | - |
| Colgate-Palmolive (India) ($COLPAL) | 21.7% | 21.0% | 18.6% | 20.7% | - |
| |
|---|
| Median (10 companies) | 17.2% | 16.0% | 17.6% | 19.0% | 18.1% |
|---|
| Emami ($EMAMILTD) | 20.9% | 20.5% | 24.3% | 25.0% | 26.1% |
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% | - |
| 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% | - |
| Cupid ($CUPID) | - | - | - | 3.0% | - |
| |
|---|
| Median (9 companies) | 4.0% | 4.0% | 5.1% | 3.0% | 2.1% |
|---|
| Emami ($EMAMILTD) | 8.0% | 5.0% | 3.6% | 5.0% | 69.3% |
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 ($BAJAJCORP) | - | 36.9% | 36.2% | 46.5% | 54.8% |
| Procter & Gamble Hygiene & Health Care ($PGHH) | 28.1% | 30.3% | 43.2% | 40.1% | - |
| Marico ($MARICO) | 23.2% | 22.6% | 26.9% | 36.1% | 40.6% |
| |
|---|
| Median (10 companies) | 25.6% | 29.5% | 28.9% | 36.1% | 35.0% |
|---|
| Emami ($EMAMILTD) | 31.5% | 36.7% | 43.3% | 45.4% | 25.1% |
Top companies by Net Debt / EBITDA
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Godrej Consumer Products ($GODREJCP) | 1.6x | 1.7x | 1.5x | 1.7x | 1.4x |
| Bliss Gvs Pharma ($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 ($CUPID) | 1.7x | 0.5x | 1.4x | -0.1x | - |
| |
|---|
| Median (9 companies) | 0.4x | 0.5x | 0.3x | -0.1x | 0.2x |
|---|
| Emami ($EMAMILTD) | 0.5x | -0.5x | -0.5x | -0.6x | 0.8x |
