Apollo Tyres reports 169% CAPEX growth in 2016 while 8.0% Revenue decline
11-05-2016 • About Apollo Tyres (
$APOLLOTYRE) • By InTwits
Apollo Tyres reported FY2016 financial results today. Overall the company's long term financial model is characterised by the following facts:
- EBITDA Margin is expanding: 16.8% in FY2016 vs. 15.2% in FY2015 vs. 9.7% in FY2012
- Apollo Tyres has medium CAPEX intensity: 5 year average CAPEX/Revenue was 7.0%. At the same time it's in pair with industry average of 8.1%
- CAPEX is quite volatile: ₹17,154m in FY2016, ₹6,373m in FY2015, ₹4,989m in FY2014, ₹6,250m in FY2013, ₹7,930m in FY2012
- The company has highly profitable business model: ROIC is 20.5%
- It operates with high leverage: Net Debt/EBITDA is 0.4x 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 decreased on 8.0%. Revenue decline was accelerating on average at -10.0 pp per annum in FY2012-FY2016. Revenue decline happened at the same time with EBITDA margin expansion. EBITDA Margin increased slightly on 1.6 pp from 15.2% to 16.8% in FY2016. EBITDA Margin followed a growing trend at 1.8 pp per annum in the last 5 years.
SG&A as a % of Revenue showed almost no change in FY2016.
Net Income margin increased slightly on 1.7 pp from 7.7% to 9.3% in FY2016. Net Income margin stuck to a growing trend at 1.5 pp per annum in the last 5 years.
Investments (CAPEX, working capital and M&A)
The company's CAPEX/Revenue was 14.7% in FY2016. The company showed CAPEX/Revenue growth of 9.8 pp from 4.9% in FY2013 to 14.7% in FY2016. Average CAPEX/Revenue for the last three years was 7.8%. Apollo Tyres invested a big chunk of EBITDA (87.0%) to CAPEX which didn't stop revenue from falling. During FY2012-FY2016 CAPEX as a % of Revenue bottomed in FY2014 at 3.7% and was growing since that time.
Return on investment
The company operates at high and attractive ROIC (20.5%) while ROE is a bit lower (19.5%). ROIC decreased on 3.4 pp from 23.9% to 20.5% in FY2016. ROE decreased slightly on 0.86 pp from 20.3% to 19.5% in FY2016. During FY2012-FY2016 ROIC topped in FY2015 at 23.9%. During FY2012-FY2016 ROE topped in FY2014 at 25.2% and was declining since that time.
Leverage (Debt)
Company's Net Debt / EBITDA is 0.4x and Debt / EBITDA is 0.7x. Net Debt / EBITDA jumped on 0.2x from 0.3x to 0.4x in FY2016. Debt jumped on 32.0% while cash showed almost no change in FY2016. During FY2012-FY2016 Net Debt/EBITDA bottomed in FY2015 at 0.3x.
Apollo Tyres has short term refinancing risk: cash is only 70.0% of short term debt.
Management team
Gaurav Kumar is a the company's CFO. Gaurav Kumar has spent 5 years at the company.
Financial and operational results
Apollo Tyres ($APOLLOTYRE) key annual financial indicators| mln. INR | 2012 | 2013 | 2014 | 2015 | 2016 | 2016/2015 |
|---|
P&L
|
|---|
| Revenue | 121,533 | 127,946 | 133,103 | 127,257 | 117,078 | -8.0% |
| SG&A | | | | 2,914 | 2,825 | -3.1% |
| EBITDA | 11,768 | 14,567 | 18,877 | 19,350 | 19,710 | 1.9% |
| Net Income | 4,099 | 6,126 | 10,051 | 9,776 | 10,930 | 11.8% |
Balance Sheet
|
|---|
| Cash | 1,635 | 3,245 | 4,073 | 5,909 | 5,900 | -0.2% |
| Short Term Debt | 13,589 | 6,285 | 2,751 | 7,667 | 8,428 | 9.9% |
| Long Term Debt | 16,158 | 16,531 | 7,137 | 3,339 | 6,096 | 82.5% |
Cash flow
|
|---|
| Capex | 7,930 | 6,250 | 4,989 | 6,373 | 17,154 | 169.2% |
Ratios
|
|---|
| Revenue growth | 37.1% | 5.3% | 4.0% | -4.4% | -8.0% | |
| EBITDA growth | 21.0% | 23.8% | 29.6% | 2.5% | 1.9% | |
|
|---|
| EBITDA Margin | 9.7% | 11.4% | 14.2% | 15.2% | 16.8% | 1.6% |
| SG&A, % of revenue | | | | 2.3% | 2.4% | 0.1% |
| Net Income Margin | 3.4% | 4.8% | 7.6% | 7.7% | 9.3% | 1.7% |
| CAPEX, % of revenue | 6.5% | 4.9% | 3.7% | 5.0% | 14.7% | 9.6% |
|
|---|
| ROIC | 14.7% | 16.8% | 23.6% | 23.9% | 20.5% | -3.4% |
| ROE | 15.6% | 19.7% | 25.2% | 20.3% | 19.5% | -0.9% |
| Net Debt/EBITDA | 2.4x | 1.3x | 0.3x | 0.3x | 0.4x | 0.2x |
Peers in Auto Tyres & Rubber Products
Below you can find Apollo Tyres benchmarking vs. other companies in Auto Tyres & Rubber 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 |
|---|
| Rubfila International ($RUBFILA) | 20.9% | 4.7% | 25.1% | 28.7% | - |
| Ceat ($CEATLTD) | - | 8.7% | 9.9% | 3.6% | -0.7% |
| Balkrishna Industries ($BALKRISIND) | 41.5% | 12.5% | 11.1% | 1.2% | - |
| Pix Transmissions ($PIXTRANS) | -5.8% | 12.3% | -14.1% | -3.6% | - |
| Goodyear India ($GOODYEAR) | -2.1% | 5.9% | 0.7% | -8.0% | - |
| |
|---|
| Median (5 companies) | 9.4% | 8.7% | 9.9% | 1.2% | -0.7% |
|---|
| Apollo Tyres ($APOLLOTYRE) | - | 5.3% | 4.0% | -4.4% | -8.0% |
Top companies by EBITDA margin, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Balkrishna Industries ($BALKRISIND) | 17.0% | 20.1% | 26.0% | 19.1% | - |
| Pix Transmissions ($PIXTRANS) | 20.4% | 21.7% | 16.9% | 18.1% | - |
| Multibase India ($MULTIBASE) | - | - | - | 17.0% | - |
| Ceat ($CEATLTD) | 6.1% | 9.0% | 11.9% | 13.7% | 16.0% |
| Rubfila International ($RUBFILA) | 12.3% | 14.9% | 12.6% | 13.5% | - |
| |
|---|
| Median (7 companies) | 14.6% | 14.9% | 12.6% | 13.7% | 16.0% |
|---|
| Apollo Tyres ($APOLLOTYRE) | 9.7% | 11.4% | 14.2% | 15.2% | 16.8% |
Top companies by CAPEX/Revenue, %
| Top | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Balkrishna Industries ($BALKRISIND) | 23.4% | 29.9% | 23.5% | 9.7% | - |
| Ceat ($CEATLTD) | 3.1% | 1.7% | 2.7% | 5.3% | 12.3% |
| Rubfila International ($RUBFILA) | 0.3% | 9.1% | 5.0% | 2.2% | - |
| Multibase India ($MULTIBASE) | - | - | - | 1.8% | - |
| |
|---|
| Median (4 companies) | 1.7% | 6.1% | 4.1% | 3.7% | 12.3% |
|---|
| Apollo Tyres ($APOLLOTYRE) | 6.5% | 4.9% | 3.7% | 5.0% | 14.7% |
Top companies by ROIC, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Rubfila International ($RUBFILA) | 35.1% | 26.2% | 22.7% | 29.4% | - |
| Ceat ($CEATLTD) | 11.4% | 19.1% | 27.6% | 28.8% | 29.0% |
| Multibase India ($MULTIBASE) | 12.3% | 22.8% | 22.0% | 25.8% | - |
| Balkrishna Industries ($BALKRISIND) | 17.7% | 17.3% | 19.7% | 10.4% | - |
| Falcon Tyres ($FALCONTQ) | 6.2% | - | - | - | - |
| |
|---|
| Median (8 companies) | 11.8% | 19.1% | 22.7% | 27.3% | 29.0% |
|---|
| Apollo Tyres ($APOLLOTYRE) | 14.7% | 16.8% | 23.6% | 23.9% | 20.5% |
Top companies by Net Debt / EBITDA
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Balkrishna Industries ($BALKRISIND) | 3.2x | 3.2x | 2.5x | 2.6x | - |
| Ceat ($CEATLTD) | 4.5x | 2.1x | 1.3x | 0.8x | 0.6x |
| Tirupati Foam ($TIRFOAM) | 6.4x | 5.4x | 0.0x | 0.0x | - |
| Goodyear India ($GOODYEAR) | - | -0.3x | -1.5x | 0.0x | - |
| Pix Transmissions ($PIXTRANS) | 4.8x | -0.6x | 0.0x | 0.0x | - |
| |
|---|
| Median (7 companies) | 4.5x | -0.1x | 0.0x | 0.0x | 0.6x |
|---|
| Apollo Tyres ($APOLLOTYRE) | 2.4x | 1.3x | 0.3x | 0.3x | 0.4x |
