SRF Net Income jumped on 39.7% and EBITDA Margin increased on 5.3 pp from 16.0% to 21.3%
10-05-2016 • About SRF (
$SRF) • By InTwits
SRF reported FY2016 financial results today. Here are the key drivers of the company's long term financial model:
- SRF has high CAPEX intensity: 5 year average CAPEX/Revenue was 12.6%. At the same time it's a lot of higher than industry average of 6.8%.
- CAPEX is quite volatile: ₹5,876m in FY2016, ₹5,118m in FY2015, ₹7,995m in FY2014, ₹7,042m in FY2013, ₹0m in FY2012
- The company has highly profitable business model: ROIC is 12.5%
- It operates with high leverage: Net Debt/EBITDA is 2.2x 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
SRF's Revenue increased slightly on 0.86%. Having declining revenue the company managed to increase EBITDA margin. EBITDA Margin increased on 2.7 pp from 15.1% to 17.8% in FY2016. During the last 5 years EBITDA Margin bottomed in FY2014 at 13.2% and was growing since that time.
Net Income margin increased on 2.6 pp from 6.7% to 9.3% in FY2016. During the last 5 years Net Income margin bottomed in FY2014 at 4.1% and was growing since that time.
Investments (CAPEX, working capital and M&A)
The company's CAPEX/Revenue was 13.0% in FY2016. CAPEX/Revenue decreased on 5.7 pp from 18.7% in FY2013 to 13.0% in FY2016. For the last three years the average CAPEX/Revenue was 14.8%. SRF invested a large share of EBITDA (61.0%) to CAPEX.
Return on investment
The company operates at good ROIC (12.5%) and ROE (17.0%). ROIC increased on 2.8 pp from 9.7% to 12.5% in FY2016. ROE increased on 3.2 pp from 13.9% to 17.0% in FY2016. During the last 5 years ROIC bottomed in FY2014 at 7.1% and was growing since that time. During FY2012-FY2016 ROE bottomed in FY2014 at 8.1% and was growing since that time.
Leverage (Debt)
Debt level is 2.2x Net Debt / EBITDA and 2.6x Debt / EBITDA. Net Debt / EBITDA dropped on 1.1x from 3.3x to 2.2x in FY2016. Debt increased on 2.3% while cash jumped on 283%. During FY2012-FY2016 Net Debt/EBITDA topped in FY2014 at 4.0x and was declining since that time.
SRF has short term refinancing risk: cash is only 65.7% of short term debt.
Management team
Anoop K Joshi is a the company's CFO. Anoop K Joshi has spent 4 years at the company.
Financial and operational results
SRF ($SRF) key annual financial indicators| mln. INR | 2012 | 2013 | 2014 | 2015 | 2016 | 2016/2015 |
|---|
P&L
|
|---|
| Revenue | 39,809 | 37,689 | 39,927 | 44,924 | 45,308 | 0.9% |
| SG&A | | | | | 106 | |
| EBITDA | 9,408 | 6,789 | 5,265 | 7,175 | 9,632 | 34.2% |
| Net Income | 3,788 | 2,530 | 1,625 | 3,028 | 4,229 | 39.7% |
Balance Sheet
|
|---|
| Cash | 1,300 | 1,804 | 746 | 991 | 3,796 | 283.1% |
| Short Term Debt | 8,007 | 6,079 | 4,627 | 6,467 | 5,781 | -10.6% |
| Long Term Debt | 7,171 | 10,961 | 17,126 | 17,882 | 19,120 | 6.9% |
Cash flow
|
|---|
| Capex | 0 | 7,042 | 7,995 | 5,118 | 5,876 | 14.8% |
Ratios
|
|---|
| Revenue growth | 17.4% | -5.3% | 5.9% | 12.5% | 0.9% | |
| EBITDA growth | 1.2% | -27.8% | -22.4% | 36.3% | 34.2% | |
|
|---|
| EBITDA Margin | 23.6% | 18.0% | 13.2% | 16.0% | 21.3% | 5.3% |
| SG&A, % of revenue | | | | | 0.2% | |
| Net Income Margin | 9.5% | 6.7% | 4.1% | 6.7% | 9.3% | 2.6% |
| CAPEX, % of revenue | 0.0% | 18.7% | 20.0% | 11.4% | 13.0% | 1.6% |
|
|---|
| ROIC | 20.9% | 11.1% | 7.1% | 9.7% | 12.5% | 2.8% |
| ROE | 21.3% | 13.2% | 8.1% | 13.9% | 17.0% | 3.2% |
| Net Debt/EBITDA | 1.5x | 2.2x | 4.0x | 3.3x | 2.2x | -1.1x |
Peers in Textiles
Below we provide SRF 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 ($BLUECHIPT) | - | 12.9% | 29.9% | 56.1% | 23.7% |
| |
|---|
| Median (74 companies) | 4.4% | 9.7% | 14.5% | -0.3% | 2.4% |
|---|
| SRF ($SRF) | - | -5.3% | 5.9% | 12.5% | 0.9% |
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 ($PREMSYN) | - | - | - | 25.9% | - |
| |
|---|
| Median (85 companies) | 6.2% | 9.3% | 9.5% | 7.0% | 10.1% |
|---|
| SRF ($SRF) | 23.6% | 18.0% | 13.2% | 16.0% | 21.3% |
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 ($JINDWORLD) | 3.0% | 10.5% | 20.7% | 11.6% | - |
| Welspun India ($WELSPUNIND) | 5.6% | 7.8% | 16.4% | 10.9% | 17.7% |
| Sutlej Textiles & Industries ($SUTLEJTEX) | 3.4% | 1.8% | 5.6% | 10.7% | - |
| |
|---|
| Median (20 companies) | 3.4% | 5.3% | 6.7% | 6.3% | 6.2% |
|---|
| SRF ($SRF) | 0.0% | 18.7% | 20.0% | 11.4% | 13.0% |
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 ($ARVIND) | 11.3% | 11.2% | 13.7% | 13.2% | - |
| |
|---|
| Median (127 companies) | 3.5% | 8.9% | 9.2% | 9.0% | 14.0% |
|---|
| SRF ($SRF) | 20.9% | 11.1% | 7.1% | 9.7% | 12.5% |
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 ($RAIREKMOH) | 10.0x | 0.0x | 0.0x | 4.6x | - |
| |
|---|
| Median (70 companies) | 3.8x | 3.2x | 0.0x | 0.0x | 1.4x |
|---|
| SRF ($SRF) | 1.5x | 2.2x | 4.0x | 3.3x | 2.2x |
