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Capital First reports 45.4% Net Income growth in 2016 and 31.0% Revenue growth

13-05-2016 • About Capital First ($CAPF) • By InTwits

Capital First reported FY2016 financial results today. Overall the company's long term financial model is characterised by the following facts:
  • Capital First is a fast growth stock: FY2016 revenue growth was 31.0%, 5 year revenue CAGR was 37.4% at FY2016 ROIC
  • EBITDA Margin is declining: 61.4% in FY2016 vs. 66.6% in FY2015 vs. 74.3% in FY2012
  • Capital First has low CAPEX intensity: 5 year average CAPEX/Revenue was 1.3%. At the same time it's a lot of higher than industry average of 4.9%.
  • CAPEX is quite volatile: ₹285m in FY2016, ₹50m in FY2015, ₹49m in FY2014, ₹104m in FY2013, ₹224m in FY2012
  • It operates with high leverage: Net Debt/EBITDA is 9.4x while industry average is 1.0x
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 31.0%. Revenue decline was accompanies by EBITDA margin decline. EBITDA Margin decreased slightly on 1.5 pp from 1.9% to 0.39% in FY2016. EBITDA Margin followed a declining trend at -2.7 pp per annum in the last 5 years.

Net Income margin increased slightly on 0.87 pp from 7.9% to 8.8% in FY2016. During FY2012-FY2016 Net Income margin bottomed in FY2014 at 5.0% and was growing since that time.

Investments (CAPEX, working capital and M&A)


In FY2016 the company had CAPEX/Revenue of 1.5%. The company showed almost no change in CAPEX/Revenue from FY2013 to FY2016. Average CAPEX/Revenue for the last three years was 0.77%. During the last 5 years CAPEX as a % of Revenue bottomed in FY2015 at 0.35%.

Leverage (Debt)


Company's Net Debt / EBITDA is 9.4x and Debt / EBITDA is 10.3x. Net Debt / EBITDA jumped on 1.7x from 7.7x to 9.4x in FY2016. Debt jumped on 41.1% while cash decreased slightly on 1.5%.

Capital First has short term refinancing risk: cash is only 22.3% of short term debt.

Valuation and dividends


Capital First's trades at EV/EBITDA 13.3x and P/E 27.2x while industy averages are 17.8x and 21.9x. Capital First's EV/(EBITDA-CAPEX) is 13.7x with the industry average at 22.8x.

Financial and operational results


Capital First ($CAPF) key annual financial indicators

mln. INR201220132014201520162016/2015
P&L
Revenue7,3438,07210,61414,41918,88931.0%
EBITDA5,4545,5047,1799,60511,59720.7%
Net Income1,0586315261,1431,66245.4%
Balance Sheet
Cash5,05611,71319,92910,37010,213-1.5%
Short Term Debt18,68518,25929,35337,52545,87222.2%
Long Term Debt27,20344,21555,70147,22673,67756.0%
Cash flow
Capex2241044950285466.9%
Ratios
Revenue growth90.7%9.9%31.5%35.8%31.0%
EBITDA growth109.4%0.9%30.4%33.8%20.7%
EBITDA Margin74.3%68.2%67.6%66.6%61.4%-5.2%
Net Income Margin14.4%7.8%5.0%7.9%8.8%0.9%
CAPEX, % of revenue3.1%1.3%0.5%0.3%1.5%1.2%
ROE13.4%7.0%4.9%8.3%10.1%1.8%
Net Debt/EBITDA7.5x9.2x9.1x7.7x9.4x1.7x

Peers in Other Financial Services


Below you can find Capital First benchmarking vs. other companies in Other Financial Services 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
Lkp Finance ($LKPFIN)-20.8%-4.3%89.8%-28.6%
Aditya Birla Money ($BIRLAMONEY)--13.3%-10.6%49.0%6.8%
Geojit Bnp Paribas Financial Services ($GEOJITBNPP)-8.6%2.0%-12.6%42.3%-
Jm Financial ($JMFINANCIL)-19.3%-3.4%39.4%17.6%
Indiabulls Securities ($IBSEC)-0.1%58.0%31.6%-0.5%
 
Median (10 companies)10.3%10.8%-2.0%26.5%5.6%
Capital First ($CAPF)-9.9%31.5%35.8%31.0%


Top companies by EBITDA margin, %

Top 5 FY2012 FY2013 FY2014 FY2015 FY2016
Twentyfirst Century Management Services ($21STCENMGM)---91.9%-
Tcfc Finance ($TCFCFINQ)---88.4%-
Frontline Securities ($FRONTSEC)---87.0%-
Shardul Securities ($SHARDUL)---84.6%-
Wallfort Financial Services ($WALLFORT)---82.5%-
 
Median (31 companies)34.9%38.5%38.6%31.2%68.9%
Capital First ($CAPF)74.3%68.2%67.6%66.6%61.4%


Top companies by CAPEX/Revenue, %

Top 5 FY2012 FY2013 FY2014 FY2015 FY2016
Jm Financial ($JMFINANCIL)0.9%0.9%11.2%16.9%1.2%
Geojit Bnp Paribas Financial Services ($GEOJITBNPP)5.7%7.8%3.7%4.8%-
Multi Commodity Exchange Of India ($MCX)3.8%8.8%1.7%3.8%8.8%
Crisil ($CRISIL)4.4%1.6%1.7%1.9%-
Icra ($ICRA)2.0%2.1%13.2%1.5%-
 
Median (9 companies)4.1%1.6%1.8%1.5%8.3%
Capital First ($CAPF)3.1%1.3%0.5%0.3%1.5%


Top companies by ROIC, %

Top 5 FY2012 FY2013 FY2014 FY2015 FY2016
Crisil ($CRISIL)62.5%53.7%46.4%43.1%-
Icra ($ICRA)20.7%17.0%20.9%21.1%-
Multi Commodity Exchange Of India ($MCX)35.4%27.2%9.9%4.8%9.7%
Religare Enterprises ($RELIGARE)2.0%3.4%2.7%4.1%-
Shardul Securities ($SHARDUL)-----
 
Median (33 companies)5.4%10.2%9.9%12.9%6.3%
Capital First ($CAPF)-----


Top companies by Net Debt / EBITDA

Top 5 FY2012 FY2013 FY2014 FY2015 FY2016
Religare Enterprises ($RELIGARE)9.2x6.1x7.0x7.2x-
Jm Financial ($JMFINANCIL)6.4x6.4x4.8x4.8x5.8x
Intec Capital ($INTECCAP)5.1x4.9x4.6x4.5x-
Indiabulls Securities ($IBSEC)1.6x2.5x1.9x4.0x4.0x
Lkp Finance ($LKPFIN)6.9x5.8x4.5x3.5x0.0x
 
Median (29 companies)-0.2x0.3x0.0x0.0x0.0x
Capital First ($CAPF)7.5x9.2x9.1x7.7x9.4x


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