Vakrangee reports 22.7% Net Income growth in 2016 and 14.8% Revenue growth
11-05-2016 • About Vakrangee (
$VAKRANGEE) • By InTwits
Vakrangee reported FY2016 financial results today. Overall the company's long term financial model is characterised by the following facts:
- Vakrangee is a fast growth stock: FY2016 revenue growth was 14.8%, 5 year revenue CAGR was 29.1% at FY2016 ROIC 36.8%
- Vakrangee has medium CAPEX intensity: 5 year average CAPEX/Revenue was 9.2%. At the same time it's a lot of higher than industry average of 3.6%.
- CAPEX is quite volatile: ₹134m in FY2016, ₹44m in FY2015, ₹2,284m in FY2014, ₹930m in FY2013, ₹3,745m in FY2012
- The company has highly profitable business model: ROIC is 36.8%
- It operates with medium-size leverage: Net Debt/EBITDA is 0.2x while industry average is -0.1x
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 surged on 14.8%. Having declining revenue the company managed to increase EBITDA margin. EBITDA Margin increased on 7.0 pp from 2.2% to 9.2% in FY2016. During FY2012-FY2016 EBITDA Margin topped in FY2014 at 27.4% and was declining since that time.
Net Income margin increased slightly on 0.80 pp from 11.6% to 12.4% in FY2016. Net Income margin stuck to a growing trend at 1.9 pp per annum in FY2012-FY2016.
Investments (CAPEX, working capital and M&A)
Vakrangee's CAPEX/Revenue was 0.42% in FY2016. CAPEX/Revenue decreased on 5.6 pp from 6.0% in FY2013 to 0.42% in FY2016. Average CAPEX/Revenue for the last three years was 4.1%.
Return on investment
The company operates at high and attractive ROIC (36.8%) and ROE (28.9%). ROIC showed almost no change in FY2016. ROE decreased on 3.5 pp from 32.4% to 28.9% in FY2016. ROIC grew at 4.8 pp per annum in the last 5 years. ROE followed a growing trend at 3.1 pp per annum in the last 5 years.
Leverage (Debt)
Company's Net Debt / EBITDA is 0.2x and Debt / EBITDA is 0.4x. Net Debt / EBITDA dropped on 0.3x from 0.6x to 0.2x in FY2016. Debt dropped on 23.0% while cash jumped on 1,961%. Net Debt/EBITDA followed a declining trend at -0.4x per annum in FY2012-FY2016.
Vakrangee has short term refinancing risk: cash is only 45.7% of short term debt.
Valuation and dividends
Vakrangee's trades at EV/EBITDA 12.1x and P/E 24.7x while industy averages are 17.8x and 21.9x. Vakrangee's EV/(EBITDA-CAPEX) is 12.3x with the industry average at 22.8x.
Management team
Dinesh Nandwana is a Vakrangee's CEO. Dinesh Nandwana has spent 5 years with the company. The company's CFO Subhash Singhania has spent 4 years with the company.
Financial and operational results
Vakrangee ($VAKRANGEE) key annual financial indicators| mln. INR | 2012 | 2013 | 2014 | 2015 | 2016 | 2016/2015 |
|---|
P&L
|
|---|
| Revenue | 13,532 | 15,472 | 19,519 | 27,805 | 31,907 | 14.8% |
| SG&A | | | | | 33 | |
| EBITDA | 2,415 | 3,815 | 5,346 | 7,235 | 8,220 | 13.6% |
| Net Income | 709 | 1,043 | 1,750 | 3,218 | 3,948 | 22.7% |
Balance Sheet
|
|---|
| Cash | 58 | 25 | 26 | 68 | 1,406 | 1,961.0% |
| Short Term Debt | 3,031 | 3,962 | 4,061 | 3,786 | 3,077 | -18.7% |
| Long Term Debt | 1,560 | 1,457 | 862 | 374 | 125 | -66.6% |
Cash flow
|
|---|
| Capex | 3,745 | 930 | 2,284 | 44 | 134 | 206.2% |
Ratios
|
|---|
| Revenue growth | 52.1% | 14.3% | 26.2% | 42.4% | 14.8% | |
| EBITDA growth | 74.0% | 58.0% | 40.1% | 35.3% | 13.6% | |
|
|---|
| EBITDA Margin | 17.8% | 24.7% | 27.4% | 26.0% | 25.8% | -0.3% |
| SG&A, % of revenue | | | | | 0.1% | |
| Net Income Margin | 5.2% | 6.7% | 9.0% | 11.6% | 12.4% | 0.8% |
| CAPEX, % of revenue | 27.7% | 6.0% | 11.7% | 0.2% | 0.4% | 0.3% |
|
|---|
| ROIC | 20.2% | 21.3% | 28.3% | 36.4% | 36.8% | 0.3% |
| ROE | 18.3% | 22.4% | 27.1% | 32.4% | 28.9% | -3.5% |
| Net Debt/EBITDA | 1.9x | 1.4x | 0.9x | 0.6x | 0.2x | -0.3x |
Peers in BPO/KPO
Below you can find Vakrangee benchmarking vs. other companies in BPO/KPO 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 |
|---|
| Hinduja Global Solutions ($HGS) | 44.8% | 27.6% | 26.3% | 12.1% | - |
| Eclerx Services ($ECLERX) | 38.2% | 39.7% | 27.3% | 12.0% | - |
| Firstsource Solutions ($FSL) | 12.1% | 25.0% | 10.2% | -2.3% | - |
| Xchanging Solutions ($XCHANGING) | -62.2% | 16.4% | 18.0% | -2.6% | - |
| Allsec Technologies ($ALLSEC) | 15.5% | 74.8% | -37.6% | -24.4% | - |
| |
|---|
| Median (5 companies) | 15.5% | 27.6% | 18.0% | -2.3% | - |
|---|
| Vakrangee ($VAKRANGEE) | - | 14.3% | 26.2% | 42.4% | 14.8% |
Top companies by EBITDA margin, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Eclerx Services ($ECLERX) | 40.4% | 38.7% | 42.0% | 33.5% | - |
| Firstsource Solutions ($FSL) | 8.7% | 9.9% | 11.7% | 12.5% | - |
| Hinduja Global Solutions ($HGS) | 11.9% | 11.3% | 13.0% | 11.3% | - |
| Xchanging Solutions ($XCHANGING) | 13.1% | 10.1% | 4.1% | 10.0% | - |
| Tricom India ($TRICOM) | - | - | - | 5.8% | - |
| |
|---|
| Median (6 companies) | 11.9% | 11.3% | 11.7% | 10.6% | - |
|---|
| Vakrangee ($VAKRANGEE) | 17.8% | 24.7% | 27.4% | 26.0% | 25.8% |
Top companies by CAPEX/Revenue, %
| Top | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Eclerx Services ($ECLERX) | 5.3% | 4.0% | 2.5% | 6.5% | - |
| Hinduja Global Solutions ($HGS) | 31.5% | 7.2% | 6.1% | 5.8% | - |
| Firstsource Solutions ($FSL) | 2.3% | 1.4% | 1.2% | 1.5% | - |
| |
|---|
| Median (3 companies) | 5.3% | 4.0% | 2.5% | 5.8% | - |
|---|
| Vakrangee ($VAKRANGEE) | 27.7% | 6.0% | 11.7% | 0.2% | 0.4% |
Top companies by ROIC, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Eclerx Services ($ECLERX) | 61.1% | 58.7% | 62.4% | 41.0% | - |
| Hinduja Global Solutions ($HGS) | 8.1% | 8.2% | 12.4% | 11.0% | - |
| Firstsource Solutions ($FSL) | 4.0% | 7.0% | 9.0% | 9.5% | - |
| Xchanging Solutions ($XCHANGING) | 8.3% | 6.6% | 2.2% | 7.2% | - |
| Allsec Technologies ($ALLSEC) | -13.0% | 19.9% | -40.1% | -26.5% | - |
| |
|---|
| Median (7 companies) | 8.1% | 7.0% | 9.0% | 9.5% | - |
|---|
| Vakrangee ($VAKRANGEE) | 20.2% | 21.3% | 28.3% | 36.4% | 36.8% |
Top companies by Net Debt / EBITDA
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Firstsource Solutions ($FSL) | 4.2x | 4.2x | 2.8x | 2.5x | - |
| Hinduja Global Solutions ($HGS) | 0.8x | 1.7x | 1.5x | 1.4x | - |
| Tricom India ($TRICOM) | 2.1x | 4.6x | - | 0.0x | - |
| Eclerx Services ($ECLERX) | -0.7x | -0.5x | -0.7x | -0.6x | - |
| Xchanging Solutions ($XCHANGING) | -0.8x | -2.8x | -6.2x | -3.9x | - |
| |
|---|
| Median (5 companies) | 0.3x | 1.3x | 0.4x | 0.0x | - |
|---|
| Vakrangee ($VAKRANGEE) | 1.9x | 1.4x | 0.9x | 0.6x | 0.2x |
