Grasim Industries Net Income jumped on 35.3% and Revenue jumped on 11.7%
07-05-2016 • About Grasim Industries (
$GRASIM) • By InTwits
Grasim Industries reported FY2016 financial results today. Overall the company's long term financial model is characterised by the following facts:
- Grasim Industries is a growth stock: FY2016 revenue growth was 11.7%, 5 year revenue CAGR was 11.2% at FY2016 ROIC 9.7%
- Grasim Industries has high CAPEX intensity: 5 year average CAPEX/Revenue was 13.8%. At the same time it's a lot of higher than industry average of 6.6%.
- CAPEX is quite volatile: ₹15,877m in FY2016, ₹3,461m in FY2015, ₹3,801m in FY2014, ₹3,732m in FY2013, ₹2,809m in FY2012
- The company has business model with low profitability: ROIC is 9.7%
- It operates with high leverage: Net Debt/EBITDA is 1.6x while industry average is 1.2x
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 11.7%. Revenue growth happened at the same time with EBITDA margin expansion. EBITDA Margin increased on 2.6 pp from 15.9% to 18.5% in FY2016. During FY2012-FY2016 EBITDA Margin bottomed in FY2015 at 15.9%.
Net Income margin increased slightly on 1.1 pp from 5.4% to 6.5% in FY2016. Net Income margin stuck to a declining trend at -1.3 pp per annum in FY2012-FY2016.
Investments (CAPEX, working capital and M&A)
Grasim Industries's CAPEX/Revenue was 7.7% in FY2016. The company's CAPEX/Revenue dropped on 14.1 pp from 21.7% in FY2013 to 7.7% in FY2016. It's average level of CAPEX/Revenue for the last three years was 9.8%. CAPEX as a % of Revenue declined at -3.2 pp per annum in FY2012-FY2016.
Return on investment
The company operates at low ROIC (9.7%) and ROE (9.6%). ROIC increased slightly on 1.5 pp from 8.1% to 9.7% in FY2016. ROE increased slightly on 1.8 pp from 7.8% to 9.6% in FY2016. During FY2012-FY2016 ROIC bottomed in FY2015 at 8.1%. ROE declined at -2.1 pp per annum in FY2012-FY2016.
Leverage (Debt)
Company's Net Debt / EBITDA is 1.6x and Debt / EBITDA is 1.9x. Net Debt / EBITDA dropped on 0.7x from 2.3x to 1.6x in FY2016. Debt increased on 7.6% while cash jumped on 1,332%. During the last 5 years Net Debt/EBITDA topped in FY2015 at 2.3x.
Grasim Industries has short term refinancing risk: cash is only 31.5% of short term debt.
Management team
The company's CFO Sushil Agarwal has spent 5 years with the company.
Financial and operational results
Grasim Industries ($GRASIM) key annual financial indicators| mln. INR | 2012 | 2013 | 2014 | 2015 | 2016 | 2016/2015 |
|---|
P&L
|
|---|
| Revenue | 249,836 | 276,447 | 290,037 | 324,287 | 362,177 | 11.7% |
| EBITDA | 55,791 | 59,236 | 49,148 | 51,660 | 67,060 | 29.8% |
| Net Income | 26,475 | 27,044 | 20,715 | 17,438 | 23,592 | 35.3% |
Balance Sheet
|
|---|
| Cash | 3,266 | 2,292 | 1,995 | 1,570 | 22,481 | 1,332.2% |
| Short Term Debt | 13,133 | 28,971 | 20,692 | 55,459 | 71,400 | 28.7% |
| Long Term Debt | 57,245 | 66,531 | 76,120 | 63,843 | 57,007 | -10.7% |
Cash flow
|
|---|
| Capex | 44,290 | 60,010 | 33,657 | 32,992 | 27,723 | -16.0% |
Ratios
|
|---|
| Revenue growth | 17.2% | 10.7% | 4.9% | 11.8% | 11.7% | |
| EBITDA growth | 11.7% | 6.2% | -17.0% | 5.1% | 29.8% | |
|
|---|
| EBITDA Margin | 22.3% | 21.4% | 16.9% | 15.9% | 18.5% | 2.6% |
| Net Income Margin | 10.6% | 9.8% | 7.1% | 5.4% | 6.5% | 1.1% |
| CAPEX, % of revenue | 17.7% | 21.7% | 11.6% | 10.2% | 7.7% | -2.5% |
|
|---|
| ROIC | 14.9% | 13.3% | 8.6% | 8.1% | 9.7% | 1.5% |
| ROE | 16.7% | 14.7% | 10.0% | 7.8% | 9.6% | 1.8% |
| Net Debt/EBITDA | 1.2x | 1.6x | 1.9x | 2.3x | 1.6x | -0.7x |
Peers in Textiles
Below you can find Grasim Industries benchmarking vs. other companies in Textiles 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 |
|---|
| Olympia Industries ($OLYMPTX) | -58.0% | -96.6% | 74,809.1% | 1,749.9% | - |
| Shri Dinesh Mills ($SHRIDINE) | 5.0% | 5.1% | -76.5% | 304.9% | - |
| Santaram Spinners ($SANTASPN) | 6.0% | 60.7% | -40.9% | 112.0% | - |
| Asahi Industries ($ASAHIIND) | 36.2% | 23.0% | 24.4% | 103.9% | - |
| Blue Chip Tex Industries ($BLUECHIPT) | - | 12.9% | 29.9% | 56.1% | 23.7% |
| |
|---|
| Median (74 companies) | 4.4% | 8.9% | 14.5% | -0.3% | 4.9% |
|---|
| Grasim Industries ($GRASIM) | - | 10.7% | 4.9% | 11.8% | 11.7% |
Top companies by EBITDA margin, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Sil Investments ($SILINV) | - | - | - | 93.8% | - |
| Swadeshi Polytex ($SWADPOL) | - | - | - | 64.4% | - |
| Binny ($BINNY) | - | - | - | 60.9% | - |
| Ruby Mills ($RUBYMILLS) | 28.3% | 25.1% | 28.6% | 29.3% | - |
| Premier Synthetics ($PREMSYN) | - | - | - | 25.9% | - |
| |
|---|
| Median (85 companies) | 6.2% | 9.3% | 9.5% | 7.0% | 7.8% |
|---|
| Grasim Industries ($GRASIM) | 22.3% | 21.4% | 16.9% | 15.9% | 18.5% |
Top companies by CAPEX/Revenue, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Nitin Spinners ($NITINSPIN) | 1.9% | 2.6% | 8.0% | 42.3% | 4.7% |
| Maharaja Shree Umaid Mills ($MAHASHR) | 18.6% | 24.1% | 6.8% | 16.8% | - |
| Jindal Worldwide ($JINDWORLD) | 3.0% | 10.5% | 20.7% | 11.6% | - |
| SRF ($SRF) | 0.0% | 18.7% | 20.0% | 11.4% | - |
| Welspun India ($WELSPUNIND) | 5.6% | 7.8% | 16.4% | 10.9% | 17.7% |
| |
|---|
| Median (20 companies) | 3.2% | 5.3% | 6.7% | 6.3% | 5.4% |
|---|
| Grasim Industries ($GRASIM) | 17.7% | 21.7% | 11.6% | 10.2% | 7.7% |
Top companies by ROIC, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Welspun India ($WELSPUNIND) | 9.3% | 15.6% | 8.5% | 21.9% | 25.2% |
| Maharaja Shree Umaid Mills ($MAHASHR) | -0.5% | 9.2% | 8.3% | 20.4% | - |
| Nitin Spinners ($NITINSPIN) | 6.0% | 19.5% | 21.5% | 17.5% | 17.8% |
| Sutlej Textiles & Industries ($SUTLEJTEX) | 9.5% | 13.6% | 19.8% | 14.6% | - |
| Arvind ($ARVIND) | 11.3% | 11.2% | 13.7% | 13.2% | - |
| |
|---|
| Median (127 companies) | 3.5% | 8.9% | 9.2% | 9.6% | 14.3% |
|---|
| Grasim Industries ($GRASIM) | 14.9% | 13.3% | 8.6% | 8.1% | 9.7% |
Top companies by Net Debt / EBITDA
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Bombay Rayon Fashions ($BRFL) | 4.9x | 4.9x | 11.6x | 10.0x | - |
| Ruby Mills ($RUBYMILLS) | 12.6x | 15.3x | 10.8x | 8.6x | - |
| Dcm ($DCM) | 13.5x | 3.5x | 3.7x | 5.5x | - |
| Nahar Spinning Mills ($NAHARSPING) | 70.8x | 3.8x | 3.2x | 4.9x | - |
| Rai Saheb Rekhchand Mohota Spg.& Wvg.Mills ($RAIREKMOH) | 10.0x | 0.0x | 0.0x | 4.6x | - |
| |
|---|
| Median (70 companies) | 3.8x | 3.2x | 0.0x | 0.0x | 0.5x |
|---|
| Grasim Industries ($GRASIM) | 1.2x | 1.6x | 1.9x | 2.3x | 1.6x |
