Polaris Financial Technology reports 24.0% Net Income decline in 2016 and 0.51 pp EBITDA Margin growth from 11.9% to 12.4%
12-05-2016 • About Polaris Financial Technology (
$POLARIS) • By InTwits
Polaris Financial Technology reported FY2016 financial results today. Here are the key drivers of the company's long term financial model:
- Polaris Financial Technology has low CAPEX intensity: 5 year average CAPEX/Revenue was 3.3%. At the same time it's in pair with industry average of 3.0%
- CAPEX is quite volatile: ₹327m in FY2016, ₹737m in FY2015, ₹359m in FY2014, ₹561m in FY2013, ₹1,470m in FY2012
- The company has highly profitable business model: ROIC is 24.8%
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 7.6%. During the last 5 years Revenue growth bottomed in FY2015 at -21.9%. Having declining revenue the company managed to increase EBITDA margin. EBITDA Margin increased slightly on 0.88 pp from 10.2% to 11.1% in FY2016. During FY2012-FY2016 EBITDA Margin bottomed in FY2014 at 10.2% and was growing since that time.
SG&A as a % of Revenue showed almost no change in FY2016.
Net Income margin decreased on 2.6 pp from 8.8% to 6.2% in FY2016. Net Income margin declined at -0.91 pp per annum in FY2012-FY2016.
Investments (CAPEX, working capital and M&A)
In FY2016 Polaris Financial Technology had CAPEX/Revenue of 1.6%. The company's CAPEX/Revenue decreased slightly on 0.88 pp from 2.5% in FY2013 to 1.6% in FY2016. For the last three years the average CAPEX/Revenue was 2.3%.
Return on investment
The company operates at high and attractive ROIC (24.8%) while ROE is a bit lower (14.0%). ROIC increased on 8.6 pp from 16.2% to 24.8% in FY2016. ROE showed almost no change in FY2016. During FY2012-FY2016 ROIC bottomed in FY2014 at 12.6% and was growing since that time. During the last 5 years ROE bottomed in FY2014 at 13.8% and was growing since that time.
Leverage (Debt)
The company has no debt. Cash jumped on 86.8%.
Management team
Polaris Financial Technology's CEO is Jitin Goyal. Jitin Goyal has 5 years tenure with the company. Polaris Financial Technology's CFO N M Vaidyanathan has spent 5 years with the company.
Financial and operational results
Polaris Financial Technology ($POLARIS) key annual financial indicators| mln. INR | 2012 | 2013 | 2014 | 2015 | 2016 | 2016/2015 |
|---|
P&L
|
|---|
| Revenue | 20,492 | 22,586 | 24,237 | 18,933 | 20,371 | 7.6% |
| SG&A | | | | 83 | 103 | 24.9% |
| EBITDA | 2,832 | 2,690 | 2,483 | 2,251 | 2,526 | 12.2% |
| Net Income | 2,207 | 2,008 | 1,992 | 1,673 | 1,271 | -24.0% |
Balance Sheet
|
|---|
| Cash | 2,067 | 2,049 | 1,586 | 1,407 | 2,628 | 86.8% |
| Short Term Debt | 1,041 | 1,208 | 40 | 0 | 0 | |
| Long Term Debt | 23 | 6 | 0 | 0 | 0 | |
Cash flow
|
|---|
| Capex | 1,470 | 561 | 359 | 737 | 327 | -55.7% |
Ratios
|
|---|
| Revenue growth | 28.4% | 10.2% | 7.3% | -21.9% | 7.6% | |
| EBITDA growth | 30.3% | -5.0% | -7.7% | -9.3% | 12.2% | |
|
|---|
| EBITDA Margin | 13.8% | 11.9% | 10.2% | 11.9% | 12.4% | 0.5% |
| SG&A, % of revenue | | | | 0.4% | 0.5% | 0.1% |
| Net Income Margin | 10.8% | 8.9% | 8.2% | 8.8% | 6.2% | -2.6% |
| CAPEX, % of revenue | 7.2% | 2.5% | 1.5% | 3.9% | 1.6% | -2.3% |
|
|---|
| ROIC | 19.5% | 15.1% | 12.6% | 16.2% | 24.8% | 8.6% |
| ROE | 19.6% | 15.7% | 13.8% | 13.9% | 14.0% | 0.1% |
| Net Debt/EBITDA | -0.4x | -0.3x | -0.6x | -0.6x | -1.0x | -0.4x |
Peers in IT Software Products
Below you can find Polaris Financial Technology benchmarking vs. other companies in IT Software 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 |
|---|
| Twinstar Industries ($TWINSTAR) | 204.5% | 59.8% | 38.8% | 40.3% | - |
| Atishay Infotech ($ATISHAY) | -25.4% | 6.9% | 21.8% | 28.2% | - |
| Dion Global Solutions ($DION) | 40.4% | 40.8% | -9.5% | 27.8% | - |
| Avance Technologies ($AVANCE) | -11.7% | -17.9% | -30.8% | 20.3% | - |
| Softsol India ($SOFTSOL) | -10.4% | 9.3% | -20.4% | 14.1% | - |
| |
|---|
| Median (16 companies) | 13.9% | 17.7% | 21.8% | 9.7% | -10.4% |
|---|
| Polaris Financial Technology ($POLARIS) | - | 10.2% | 7.3% | -21.9% | 7.6% |
Top companies by EBITDA margin, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Atishay Infotech ($ATISHAY) | 35.7% | 28.1% | 25.8% | 24.5% | - |
| Subex ($SUBEX) | 27.3% | 17.0% | 24.9% | 23.6% | 20.8% |
| Tata Elxsi ($TATAELXSI) | 13.8% | 11.9% | 17.6% | 20.9% | 23.0% |
| Cambridge Technology Enterprises ($CTE) | - | - | - | 20.9% | - |
| Virinchi Technologies ($VIRNICHIQ) | - | - | - | 17.4% | - |
| |
|---|
| Median (23 companies) | 7.5% | 8.5% | 9.9% | 9.2% | 20.8% |
|---|
| Polaris Financial Technology ($POLARIS) | 13.8% | 11.9% | 10.2% | 11.9% | 12.4% |
Top companies by CAPEX/Revenue, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Aurionpro Solutions ($AURIONPRO) | 17.5% | 12.3% | 12.6% | 13.4% | - |
| Mastek ($MASTKBBPH) | 2.2% | - | 0.0% | 4.9% | 2.4% |
| Dion Global Solutions ($DION) | 39.9% | 11.9% | 29.6% | 4.0% | - |
| Tata Elxsi ($TATAELXSI) | 5.3% | 5.4% | 3.1% | 3.9% | 3.6% |
| Datamatics Global Services ($DATAMATICS) | 20.2% | 3.1% | 12.9% | 2.2% | - |
| |
|---|
| Median (9 companies) | 3.1% | 6.9% | 2.7% | 2.2% | 2.4% |
|---|
| Polaris Financial Technology ($POLARIS) | 7.2% | 2.5% | 1.5% | 3.9% | 1.6% |
Top companies by ROIC, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Tata Elxsi ($TATAELXSI) | 22.5% | 19.1% | 38.3% | 55.4% | 65.9% |
| Mindteck (India) ($MINDTECK) | -2.6% | 1.2% | 20.0% | 17.5% | - |
| Blue Star Infotech ($BLUESTINFO) | - | 7.1% | 16.3% | 17.4% | - |
| Aurionpro Solutions ($AURIONPRO) | 8.6% | 8.6% | 5.9% | 12.1% | - |
| Datamatics Global Services ($DATAMATICS) | 9.8% | 11.4% | 16.4% | 11.3% | - |
| |
|---|
| Median (31 companies) | 3.8% | 4.7% | 16.3% | 11.7% | 6.9% |
|---|
| Polaris Financial Technology ($POLARIS) | 19.5% | 15.1% | 12.6% | 16.2% | 24.8% |
Top companies by Net Debt / EBITDA
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Subex ($SUBEX) | 4.6x | 13.1x | 8.5x | 8.0x | 0.9x |
| Dion Global Solutions ($DION) | 11.8x | 11.3x | - | 7.4x | - |
| Aurionpro Solutions ($AURIONPRO) | 1.7x | 1.7x | 1.9x | 1.2x | - |
| Saksoft ($SAKSOFT) | 2.8x | 2.3x | 0.0x | 1.2x | - |
| Datamatics Global Services ($DATAMATICS) | 0.5x | 0.3x | 0.5x | 0.3x | - |
| |
|---|
| Median (19 companies) | 0.7x | 0.0x | 0.0x | 0.0x | -0.4x |
|---|
| Polaris Financial Technology ($POLARIS) | -0.4x | -0.3x | -0.6x | -0.6x | -1.0x |
