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Morepen Laboratories EBITDA jumped on 51.5% and Revenue surged on 21.1%

10-05-2016 • About Morepen Laboratories ($MOREPENLAB) • By InTwits

Morepen Laboratories reported FY2016 financial results today. Overall the company's long term financial model is characterised by the following facts:
  • Morepen Laboratories is a fast growth stock: FY2016 revenue growth was 21.1%, 5 year revenue CAGR was 16.8% at FY2016 ROIC 10.6%
  • Morepen Laboratories has low CAPEX intensity: 5 year average CAPEX/Revenue was 1.4%. At the same time it's in pair with industry average of 15.2%
  • CAPEX is quite volatile: ₹99m in FY2016, ₹48m in FY2015, ₹45m in FY2014, ₹48m in FY2013, ₹32m in FY2012
  • The company has business model with average profitability: ROIC is 10.6%
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 21.1%. During FY2012-FY2016 Revenue growth bottomed in FY2015 at 9.2%. Revenue growth happened at the same time with EBITDA margin expansion. EBITDA Margin increased on 3.0 pp from 12.0% to 15.1% in FY2016. EBITDA Margin stuck to a growing trend at 1.9 pp per annum in FY2012-FY2016.

Net Income margin increased on 2.1 pp from 0.53% to 2.6% in FY2016. Net Income margin grew at 2.9 pp per annum in the last 5 years.

Investments (CAPEX, working capital and M&A)


Morepen Laboratories's CAPEX/Revenue was 2.0% in FY2016. CAPEX/Revenue increased slightly on 0.59 pp from 1.5% in FY2013 to 2.0% in FY2016. It's average level of CAPEX/Revenue for the last three years was 1.5%.

Return on investment


The company operates at low ROIC (10.6%) and ROE (7.3%). ROIC increased on 8.1 pp from 2.5% to 10.6% in FY2016. ROE increased on 6.1 pp from 1.2% to 7.3% in FY2016. ROIC stuck to a growing trend at 4.0 pp per annum in the last 5 years. ROE stuck to a growing trend at 4.9 pp per annum in FY2012-FY2016.

Leverage (Debt)


Debt level is 0.5x Net Debt / EBITDA and 0.6x Debt / EBITDA. Net Debt / EBITDA dropped on 1.0x from 1.6x to 0.5x in FY2016. Debt dropped on 46.3% while cash dropped on 32.0%. Net Debt/EBITDA declined at -1.3x per annum in the last 5 years.

The company has no short term refinancing risk: short term debt is zero.

Valuation and dividends


Morepen Laboratories's trades at EV/EBITDA 12.0x and P/E 65.7x while industy averages are 17.8x and 21.9x. Morepen Laboratories's EV/(EBITDA-CAPEX) is 13.9x with the industry average at 22.8x.

Financial and operational results


Morepen Laboratories ($MOREPENLAB) key annual financial indicators

mln. INR201220132014201520162016/2015
P&L
Revenue2,8023,2593,6694,0064,85121.1%
EBITDA19231048948273151.5%
Net Income-237-205-2821128498.1%
Balance Sheet
Cash3747575638-32.0%
Short Term Debt701661451860-100.0%
Long Term Debt1,139947748623434-30.3%
Cash flow
Capex3248454899105.8%
Ratios
Revenue growth25.8%16.3%12.6%9.2%21.1%
EBITDA growth233.4%60.9%57.9%-1.3%51.5%

EBITDA Margin6.9%9.5%13.3%12.0%15.1%3.0%
Net Income Margin-8.4%-6.3%-0.8%0.5%2.6%2.1%
CAPEX, % of revenue1.1%1.5%1.2%1.2%2.0%0.8%

ROIC-6.3%-3.5%0.8%2.5%10.6%8.1%
ROE-11.1%-10.8%-1.5%1.2%7.3%6.1%
Net Debt/EBITDA6.1x3.4x1.7x1.6x0.5x-1.0x

Peers in Pharmaceuticals


Below we provide Morepen Laboratories benchmarking against other companies in Pharmaceuticals 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
Mangalam Drugs & Organics ($MANGALAM)16.6%-18.2%-2.1%79.8%-
Sun Pharmaceutical Industries ($SUNPHARMA)39.9%40.4%42.4%70.2%-
Lyka Labs ($LYKALABS)41.9%-25.7%-22.6%68.7%-
Marksans Pharma ($MARKSANS)16.7%23.3%43.3%26.8%-
Torrent Cables ($TORRCABS)27.5%17.4%-42.9%26.5%-
 
Median (41 companies)16.7%14.7%13.7%8.6%14.7%
Morepen Laboratories ($MOREPENLAB)-16.3%12.6%9.2%21.1%


Top companies by Gross margin, %

Top  FY2012 FY2013 FY2014 FY2015 FY2016
Dr.Reddy'S Laboratories ($DRREDDY)-52.1%57.4%57.6%-
Omega Laboratories ($OMEGALAB)0.0%0.0%0.0%0.0%0.0%
 
Median (2 companies)46.9%26.1%28.7%28.8%0.0%


Top companies by EBITDA margin, %

Top 5 FY2012 FY2013 FY2014 FY2015 FY2016
Divi'S Laboratories ($DIVISLAB)37.2%38.2%40.2%37.4%-
Hester Biosciences ($HESTERBIO)---32.9%-
Sun Pharmaceutical Industries ($SUNPHARMA)40.8%44.3%44.9%29.2%-
Natco Pharma ($NATCOPHARM)21.5%23.2%24.9%26.2%-
Dr.Reddy'S Laboratories ($DRREDDY)25.8%22.9%25.1%23.2%-
 
Median (53 companies)12.9%13.4%15.0%12.1%19.6%
Morepen Laboratories ($MOREPENLAB)6.9%9.5%13.3%12.0%15.1%


Top companies by CAPEX/Revenue, %

Top 5 FY2012 FY2013 FY2014 FY2015 FY2016
Claris Lifesciences ($CLARIS)58.1%42.9%-103.1%15.8%
Wintac ($WINTAC)---22.8%-
Hester Biosciences ($HESTERBIO)---21.5%-
Ipca Laboratories ($IPCALAB)11.2%8.3%11.6%17.8%-
Natco Pharma ($NATCOPHARM)24.4%16.3%14.4%14.1%-
 
Median (31 companies)8.2%8.3%5.8%6.2%9.5%
Morepen Laboratories ($MOREPENLAB)1.1%1.5%1.2%1.2%2.0%


Top companies by ROIC, %

Top 5 FY2012 FY2013 FY2014 FY2015 FY2016
Marksans Pharma ($MARKSANS)-142.4%34.9%33.8%41.2%-
Alembic Pharmaceuticals ($APLLTD)27.5%29.1%41.5%35.7%62.1%
Jenburkt Pharmaceuticals ($JENBURPH)34.1%29.0%32.4%35.3%-
Abbott India ($ABBOTINDIA)29.6%26.9%30.5%34.2%-
Divi'S Laboratories ($DIVISLAB)30.6%30.4%32.3%30.5%-
 
Median (63 companies)14.0%13.8%15.6%13.3%14.1%
Morepen Laboratories ($MOREPENLAB)-6.3%-3.5%0.8%2.5%10.6%


Top companies by Net Debt / EBITDA

Top 5 FY2012 FY2013 FY2014 FY2015 FY2016
Jubilant Life Sciences Limited ($JUBILANT)4.0x3.5x3.5x6.4x-
Shasun Pharmaceuticals ($SHASUNPHAR)2.8x4.5x6.0x6.2x-
Claris Lifesciences ($CLARIS)1.9x1.1x1.8x3.2x2.9x
Dishman Pharmaceuticals & Chemicals ($DISHMAN)3.6x2.6x2.3x2.9x-
Neuland Laboratories ($NEULANDLAB)4.2x3.5x2.6x2.6x-
 
Median (48 companies)1.4x1.2x0.3x0.0x1.2x
Morepen Laboratories ($MOREPENLAB)6.1x3.4x1.7x1.6x0.5x