Magma Fincorp Net Income surged on 17.0% while EBITDA Margin decreased on 9.9 pp from 62.4% to 52.6%
12-05-2016 • About Magma Fincorp (
$MAGMA) • By InTwits
Magma Fincorp reported FY2016 financial results today. Overall the company's long term financial model is characterised by the following facts:
- Magma Fincorp is a growth stock: FY2016 revenue growth was 5.3%, 5 year revenue CAGR was 23.4% at FY2016 ROIC 2.3%
- EBITDA Margin is declining: 52.6% in FY2016 vs. 62.4% in FY2015 vs. 70.2% in FY2012
- The company has potentially unprofitable business model: ROIC is 2.3%
- It operates with high leverage: Net Debt/EBITDA is 7.5x while industry average is 2.9x
Below you can find a comprehensive analysis of the key data driving the company's performance and the stock price.
Revenue and profitability
The company's Revenue increased on 5.3%. During FY2012-FY2016 Revenue growth topped in FY2013 at 57.6% and was decelerating since that time. Having declining revenue the company managed to increase EBITDA margin. EBITDA Margin increased slightly on 1.7 pp from 25.3% to 27.0% in FY2016. EBITDA Margin followed a declining trend at -4.2 pp per annum in the last 5 years.
Net Income margin increased slightly on 0.85 pp from 7.6% to 8.4% in FY2016.
Return on investment
The company operates at low ROIC (2.3%) and ROE (11.1%). ROIC showed almost no change in FY2016. ROE showed almost no change in FY2016. ROE stuck to a growing trend at 0.79 pp per annum in the last 5 years.
Leverage (Debt)
Debt level is 7.5x Net Debt / EBITDA and 7.8x Debt / EBITDA. Net Debt / EBITDA dropped on 0.2x from 7.7x to 7.5x in FY2016. Debt dropped on 11.9% while cash jumped on 33.1%.
Magma Fincorp has short term refinancing risk: cash is only 5.8% of short term debt.
Valuation and dividends
Magma Fincorp's trades at EV/EBITDA 9.1x and P/E 10.1x while industy averages are 17.8x and 21.9x.
Financial and operational results
Magma Fincorp ($MAGMA) key annual financial indicators| mln. INR | 2012 | 2013 | 2014 | 2015 | 2016 | 2016/2015 |
|---|
P&L
|
|---|
| Revenue | 10,796 | 17,016 | 21,172 | 23,812 | 25,063 | 5.3% |
| EBITDA | 7,583 | 11,764 | 14,074 | 14,862 | 13,171 | -11.4% |
| Net Income | 740 | 1,382 | 1,518 | 1,807 | 2,114 | 17.0% |
Balance Sheet
|
|---|
| Cash | 3,284 | 4,387 | 4,222 | 3,068 | 4,084 | 33.1% |
| Short Term Debt | 40,595 | 65,931 | 70,066 | 81,455 | 70,046 | -14.0% |
| Long Term Debt | 21,245 | 38,693 | 32,189 | 35,686 | 33,132 | -7.2% |
Cash flow
|
|---|
| Capex | | | | | 0 | |
Ratios
|
|---|
| Revenue growth | 23.5% | 57.6% | 24.4% | 12.5% | 5.3% | |
| EBITDA growth | 34.8% | 55.1% | 19.6% | 5.6% | -11.4% | |
|
|---|
| EBITDA Margin | 70.2% | 69.1% | 66.5% | 62.4% | 52.6% | -9.9% |
| Net Income Margin | 6.9% | 8.1% | 7.2% | 7.6% | 8.4% | 0.8% |
|
|---|
| ROIC | | | 2.0% | 2.1% | 2.3% | 0.2% |
| ROE | 7.5% | 10.0% | 9.6% | 10.7% | 11.1% | 0.4% |
| Net Debt/EBITDA | 7.7x | 8.5x | 7.0x | 7.7x | 7.5x | -0.2x |
Peers in Finance (including NBFCs)
Below we provide Magma Fincorp benchmarking against other companies in Finance (including NBFCs) 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 |
|---|
| Fortune Financial Services (India) ($FORTUNEF) | -11.7% | -24.9% | -7.1% | 188.4% | - |
| Motilal Oswal Financial Services ($MOTILALOFS) | - | 0.4% | -0.9% | 64.7% | 39.8% |
| Sks Microfinance ($SKSMICRO) | - | -25.6% | 55.0% | 47.3% | 64.5% |
| Bajaj Holdings & Investment ($BAJAJHLDNG) | - | 12.8% | 25.9% | 27.0% | -12.2% |
| Bajaj Finserv ($BAJAJFINSV) | 59.7% | 28.1% | 18.8% | 26.8% | - |
| |
|---|
| Median (23 companies) | 23.9% | 24.4% | 19.8% | 14.3% | 12.0% |
|---|
| Magma Fincorp ($MAGMA) | - | 57.6% | 24.4% | 12.5% | 5.3% |
Top companies by EBITDA margin, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Microse India ($MICROSE) | - | - | - | 101.1% | - |
| Pnb Gilts ($PNBGILTS) | 94.0% | 96.4% | 96.4% | 96.1% | - |
| Jsw Holdings ($JSWHL) | - | - | - | 93.8% | - |
| Rural Electrification Corporation ($RECLTD) | 97.2% | 97.3% | 96.7% | 93.3% | - |
| Bajaj Holdings & Investment ($BAJAJHLDNG) | 96.1% | 95.4% | 92.3% | 92.7% | 91.4% |
| |
|---|
| Median (48 companies) | 64.8% | 65.4% | 65.5% | 49.0% | 66.8% |
|---|
| Magma Fincorp ($MAGMA) | 70.2% | 69.1% | 66.5% | 62.4% | 52.6% |
Top companies by CAPEX/Revenue, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Fortune Financial Services (India) ($FORTUNEF) | 1.0% | 1.3% | 4.5% | 7.3% | - |
| Clarus Finance & Securities ($CLARUS) | - | - | 6.9% | 5.8% | - |
| Srei Infrastructure Finance ($SREINFRA) | 30.2% | 8.5% | 12.3% | 5.4% | - |
| Motilal Oswal Financial Services ($MOTILALOFS) | 15.5% | 5.3% | 1.7% | 3.4% | 2.5% |
| Bengal & Assam Company ($BENGALASM) | 15.9% | 4.5% | 1.2% | 2.1% | - |
| |
|---|
| Median (22 companies) | 0.8% | 0.7% | 1.0% | 0.7% | 1.0% |
|---|
Top companies by ROIC, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Motilal Oswal Financial Services ($MOTILALOFS) | - | 12.0% | 9.7% | 11.9% | 7.8% |
| Sks Microfinance ($SKSMICRO) | - | - | 4.1% | 6.6% | 7.6% |
| Shriram City Union Finance ($SHRIRAMCIT) | 6.1% | 5.8% | 5.8% | 5.7% | 4.6% |
| Rural Electrification Corporation ($RECLTD) | - | 4.7% | 5.2% | 4.7% | - |
| Mahindra & Mahindra Financial Services ($M&MFIN) | 6.4% | 6.3% | 5.3% | 4.2% | 3.2% |
| |
|---|
| Median (52 companies) | 4.1% | 4.6% | 4.2% | 4.2% | 4.2% |
|---|
| Magma Fincorp ($MAGMA) | - | - | 2.0% | 2.1% | 2.3% |
Top companies by Net Debt / EBITDA
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Fortune Financial Services (India) ($FORTUNEF) | 9.0x | - | 10.8x | 8.9x | - |
| Pnb Gilts ($PNBGILTS) | 14.2x | 11.2x | 11.3x | 8.8x | - |
| Srei Infrastructure Finance ($SREINFRA) | 7.0x | 6.2x | 7.5x | 8.0x | - |
| Rural Electrification Corporation ($RECLTD) | 8.3x | 8.0x | 7.5x | 8.0x | - |
| Cholamandalam Investment And Finance Company ($CHOLAFIN) | 9.0x | 7.9x | 7.4x | 7.2x | 4.9x |
| |
|---|
| Median (44 companies) | 4.4x | 3.6x | 2.9x | 0.0x | 5.3x |
|---|
| Magma Fincorp ($MAGMA) | 7.7x | 8.5x | 7.0x | 7.7x | 7.5x |
