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Rswm reports 9.9% EBITDA growth in 2016 and 1.4 pp EBITDA Margin growth from 11.7% to 13.0%

11-05-2016 • About Rswm ($RSWM) • By InTwits

Rswm reported FY2016 financial results today. Here are the key drivers of the company's long term financial model:
  • Rswm has medium CAPEX intensity: 5 year average CAPEX/Revenue was 6.9%. At the same time it's in pair with industry average of 6.4%
  • CAPEX is quite volatile: ₹1,345m in FY2016, ₹2,638m in FY2015, ₹866m in FY2014, ₹946m in FY2013, ₹3,164m in FY2012
  • The company has highly profitable business model: ROIC is 13.3%
  • It operates with high leverage: Net Debt/EBITDA is 3.3x 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 decreased slightly on 1.6%. Having declining revenue the company managed to increase EBITDA margin. EBITDA Margin increased slightly on 1.4 pp from 11.7% to 13.0% in FY2016.

SG&A as a % of Revenue increased on 2.0 pp from 0.094% to 2.1% in FY2016.

Net Income margin increased slightly on 0.75 pp from 2.9% to 3.6% in FY2016.

Investments (CAPEX, working capital and M&A)


In FY2016 the company had CAPEX/Revenue of 4.6%. The company showed small growth in CAPEX/Revenue of 1.1 pp from 3.6% in FY2013 to 4.6% in FY2016. Average CAPEX/Revenue for the last three years was 5.4%.

Return on investment


The company operates at high and attractive ROE (22.2%) while ROIC is a bit lower (13.3%). ROIC increased slightly on 1.4 pp from 11.8% to 13.3% in FY2016. ROE increased slightly on 0.90 pp from 21.3% to 22.2% in FY2016.

Leverage (Debt)


Debt level is 3.3x Net Debt / EBITDA and 3.3x Debt / EBITDA. Net Debt / EBITDA dropped on 0.5x from 3.7x to 3.3x in FY2016. Debt decreased on 3.7% while cash increased on 4.7%.

Rswm has short term refinancing risk: cash is only 0.4% of short term debt.

Valuation and dividends


Rswm's trades at EV/EBITDA 5.3x and P/E 7.4x while industy averages are 17.8x and 21.9x. Rswm's EV/(EBITDA-CAPEX) is 8.2x with the industry average at 22.8x.

Financial and operational results


Rswm ($RSWM) key annual financial indicators

mln. INR201220132014201520162016/2015
P&L
Revenue21,38926,56231,30829,62329,155-1.6%
SG&A286142,112.0%
EBITDA1,3283,7263,8783,4593,8029.9%
Net Income-4277171,0078491,05524.3%
Balance Sheet
Cash14142428294.7%
Short Term Debt4,8856,1346,3746,2246,90410.9%
Long Term Debt8,7497,7206,5736,6925,537-17.3%
Cash flow
Capex3,1649468662,6381,345-49.0%
Ratios
Revenue growth0.2%24.2%17.9%-5.4%-1.6%
EBITDA growth-61.6%180.6%4.1%-10.8%9.9%
EBITDA Margin6.2%14.0%12.4%11.7%13.0%1.4%
SG&A, % of revenue0.1%2.1%2.0%
Net Income Margin-2.0%2.7%3.2%2.9%3.6%0.8%
CAPEX, % of revenue14.8%3.6%2.8%8.9%4.6%-4.3%
ROIC2.2%15.2%15.5%11.8%13.3%1.4%
ROE-15.7%26.4%30.6%21.3%22.2%0.9%
Net Debt/EBITDA10.3x3.7x3.3x3.7x3.3x-0.5x

Peers in Textiles


Below we provide Rswm 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)4.8%8.9%14.3%0.2%2.1%
Rswm ($RSWM)-24.2%17.9%-5.4%-1.6%


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)6.5%9.3%9.5%7.0%12.3%
Rswm ($RSWM)6.2%14.0%12.4%11.7%13.0%


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%13.0%
Welspun India ($WELSPUNIND)5.6%7.8%16.4%10.9%17.7%
 
Median (20 companies)3.2%5.9%7.4%6.3%6.7%
Rswm ($RSWM)14.8%3.6%2.8%8.9%4.6%


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%14.4%
Arvind ($ARVIND)11.3%11.2%13.7%13.2%-
 
Median (127 companies)3.6%8.9%8.6%9.0%14.0%
Rswm ($RSWM)2.2%15.2%15.5%11.8%13.3%


Top companies by Net Debt / EBITDA

Top 5 FY2012 FY2013 FY2014 FY2015 FY2016
Bombay Rayon Fashions ($BRFL)4.9x4.9x11.6x10.0x-
Ruby Mills ($RUBYMILLS)12.6x15.3x10.8x8.6x-
Dcm ($DCM)13.5x3.5x3.7x5.5x-
Nahar Spinning Mills ($NAHARSPING)70.8x3.8x3.2x4.9x-
Rai Saheb Rekhchand Mohota Spg.& Wvg.Mills ($RAIREKMOH)10.0x0.0x0.0x4.6x-
 
Median (70 companies)3.8x3.2x0.0x0.0x1.5x
Rswm ($RSWM)10.3x3.7x3.3x3.7x3.3x


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