Sangam (India) Net Income jumped on 49.4% and Revenue increased on 2.4%

09-05-2016 • About Sangam (India) ($SANGAMIND) • By InTwits

Sangam (India) reported FY2016 financial results today. Here are the key drivers of the company's long term financial model:

The company has highly profitable business model: ROIC is 15.0%
It operates with high leverage: Net Debt/EBITDA is 2.5x 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 increased on 2.4%. Revenue decline was accompanies by EBITDA margin decline. EBITDA Margin decreased slightly on 1.5 pp from 1.9% to 0.39% in FY2016.

Net Income margin increased slightly on 1.6 pp from 3.5% to 5.1% in FY2016. Net Income margin stuck to a growing trend at 0.79 pp per annum in FY2012-FY2016.

Return on investment

The company operates at good ROIC (15.0%) and ROE (19.0%). ROIC increased on 2.2 pp from 12.8% to 15.0% in FY2016. ROE increased on 4.3 pp from 14.7% to 19.0% in FY2016.

Leverage (Debt)

Debt level is 2.5x Net Debt / EBITDA and 2.5x Debt / EBITDA. Net Debt / EBITDA dropped on 0.5x from 2.9x to 2.5x in FY2016. Debt decreased on 5.5% while cash decreased on 2.2%.

Sangam (India) has short term refinancing risk: cash is only 1.2% of short term debt.

Valuation and dividends

Sangam (India)'s trades at EV/EBITDA 7.2x and P/E 14.3x while industy averages are 17.8x and 21.9x.

Financial and operational results

Sangam (India) ($SANGAMIND) key annual financial indicators

mln. INR	2012	2013	2014	2015	2016	2016/2015
P&L
Revenue	14,172	14,788	14,326	14,687	15,044	2.4%
EBITDA	1,604	2,145	1,889	2,089	2,333	11.7%
Net Income	171	513	405	516	770	49.4%
Balance Sheet
Cash	90	82	30	37	36	-2.2%
Short Term Debt	2,075	2,196	3,160	3,590	3,015	-16.0%
Long Term Debt	4,441	3,449	2,759	2,578	2,813	9.1%
Cash flow
Capex	1,609		379	988
Ratios
Revenue growth	21.0%	4.3%	-3.1%	2.5%	2.4%
EBITDA growth	-21.3%	33.7%	-11.9%	10.6%	11.7%

EBITDA Margin	11.3%	14.5%	13.2%	14.2%	15.5%	1.3%
Net Income Margin	1.2%	3.5%	2.8%	3.5%	5.1%	1.6%
CAPEX, % of revenue	11.3%		2.6%	6.7%

ROIC	9.8%	14.7%	12.2%	12.8%	15.0%	2.2%
ROE	6.9%	18.7%	12.9%	14.7%	19.0%	4.3%
Net Debt/EBITDA	4.0x	2.6x	3.1x	2.9x	2.5x	-0.5x

Peers in Textiles

Below we provide Sangam (India) benchmarking against other companies in Textiles industry for the last 5 years. We show data for the top-5 companies by key financial metric together with the median value for all the companies in the industry.

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 ($BLUECHIPT)	-	12.9%	29.9%	56.1%	23.7%
Median (74 companies)	4.3%	9.7%	14.5%	-0.3%	4.1%
Sangam (India) ($SANGAMIND)	-	4.3%	-3.1%	2.5%	2.4%

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 ($PREMSYN)	-	-	-	25.9%	-
Median (85 companies)	6.2%	9.3%	9.5%	7.0%	12.4%
Sangam (India) ($SANGAMIND)	11.3%	14.5%	13.2%	14.2%	15.5%

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 ($WELSPUNIND)	5.6%	7.8%	16.4%	10.9%	17.7%
Median (20 companies)	3.2%	5.6%	7.4%	6.4%	6.2%
Sangam (India) ($SANGAMIND)	11.3%	-	2.6%	6.7%	-

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 ($ARVIND)	11.3%	11.2%	13.7%	13.2%	-
Median (127 companies)	3.5%	8.9%	8.6%	9.0%	12.4%
Sangam (India) ($SANGAMIND)	9.8%	14.7%	12.2%	12.8%	15.0%

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 ($RAIREKMOH)	10.0x	0.0x	0.0x	4.6x	-
Median (70 companies)	3.8x	3.2x	0.0x	0.0x	1.4x
Sangam (India) ($SANGAMIND)	4.0x	2.6x	3.1x	2.9x	2.5x

Sangam (India) stock price chart

Sangam (India) financials

mln.	FY2010	FY2011	FY2012

Revenue	17,412	11,715	14,172
EBITDA	1,301	2,038	1,604
Net income	171.5	565.9	170.8
CAPEX	287.5	480.5	1,609
Debt	6,926	6,429	6,516
Cash	1,268	101.9	89.900

About Sangam (India)

Sangam (India) Limited manufactures and sells textile products primarily in India. It offers polyester viscose (PV), PV-dyed, synthetic and blended dyed/grey spun, texturised, and cotton yarns; PV, processed, synthetics blended, denim, and knitted fabrics; and branded suitings. The company markets its products under the Sangam Suitings, Sangam Denims, and Sangam Yarns brands through a network of dealers and retailers. Sangam (India) Limited also exports its products to Turkey, Portugal, Egypt, China, Poland, Brazil, Germany, Belgium, Chile, Italy, Australia, Japan, the United Kingdom, the United States, the United Arab Emirates, South Africa, etc. It primarily serves textile companies. The company also operates wind power plants of 5 megawatts at Jaisalmer. Sangam (India) Limited was founded in 1984 and is headquartered in Mumbai, India.