Tata Coffee reports 8.5% EBITDA decline in 2016 while 4.2% Revenue growth
16-05-2016 • About Tata Coffee (
$TATACOFFEE) • By InTwits
Tata Coffee reported FY2016 financial results today. Here are the key drivers of the company's long term financial model:
- Tata Coffee has low CAPEX intensity: 5 year average CAPEX/Revenue was 3.7%. At the same time it's in pair with industry average of 2.8%
- CAPEX is quite volatile: ₹557m in FY2016, ₹266m in FY2015, ₹246m in FY2014, ₹521m in FY2013, ₹1,349m in FY2012
- The company has business model with average profitability: ROIC is 11.5%
- It operates with high leverage: Net Debt/EBITDA is 2.7x while industry average is 1.5x
Below you can find a comprehensive analysis of the key data driving the company's performance and the stock price.
Revenue and profitability
Tata Coffee's Revenue increased on 4.2%. Revenue growth was financed by EBITDA margin decline. EBITDA Margin decreased on 2.5 pp from 20.2% to 17.7% in FY2016. During FY2012-FY2016 EBITDA Margin topped in FY2015 at 20.2%.
Net Income margin showed almost no change in FY2016.
Investments (CAPEX, working capital and M&A)
In FY2016 Tata Coffee had CAPEX/Revenue of 3.6%. The company showed small CAPEX/Revenue decline of 0.78 pp from 4.3% in FY2013 to 3.6% in FY2016. For the last three years the average CAPEX/Revenue was 3.7%. During FY2012-FY2016 CAPEX as a % of Revenue topped in FY2013 at 4.3% and was declining since that time.
Return on investment
The company operates at good ROE (13.8%) while ROIC is low (11.5%). ROIC decreased on 2.6 pp from 14.0% to 11.5% in FY2016. ROE decreased on 2.3 pp from 16.2% to 13.8% in FY2016.
Leverage (Debt)
Company's Net Debt / EBITDA is 2.7x and Debt / EBITDA is 2.9x. Net Debt / EBITDA jumped on 0.2x from 2.5x to 2.7x in FY2016. Debt showed almost no change in FY2016 while cash surged on 28.3%.
Tata Coffee has short term refinancing risk: cash is only 25.7% of short term debt.
Management team
Tata Coffee's CEO Sanjiv Sarin has spent 5 years with the company. Tata Coffee's CFO is K P Venkataramanan. K P Venkataramanan has 6 years tenure at the company.
Financial and operational results
Tata Coffee ($TATACOFFEE) key annual financial indicators| mln. INR | 2012 | 2013 | 2014 | 2015 | 2016 | 2016/2015 |
|---|
P&L
|
|---|
| Revenue | 15,475 | 16,611 | 16,110 | 16,929 | 17,644 | 4.2% |
| EBITDA | 1,986 | 3,191 | 3,208 | 3,416 | 3,126 | -8.5% |
| Net Income | 812 | 1,162 | 815 | 1,204 | 1,178 | -2.1% |
Balance Sheet
|
|---|
| Cash | 179 | 534 | 841 | 408 | 524 | 28.3% |
| Short Term Debt | 477 | 1,550 | 1,603 | 1,789 | 2,039 | 14.0% |
| Long Term Debt | 6,904 | 7,365 | 7,826 | 7,230 | 6,935 | -4.1% |
Cash flow
|
|---|
| Capex | 493 | 722 | 641 | 611 | 628 | 2.8% |
Ratios
|
|---|
| Revenue growth | 19.1% | 7.3% | -3.0% | 5.1% | 4.2% | |
| EBITDA growth | -22.6% | 60.6% | 0.5% | 6.5% | -8.5% | |
|
|---|
| EBITDA Margin | 12.8% | 19.2% | 19.9% | 20.2% | 17.7% | -2.5% |
| Net Income Margin | 5.2% | 7.0% | 5.1% | 7.1% | 6.7% | -0.4% |
| CAPEX, % of revenue | 3.2% | 4.3% | 4.0% | 3.6% | 3.6% | -0.1% |
|
|---|
| ROIC | 10.9% | 16.2% | 14.0% | 14.0% | 11.5% | -2.6% |
| ROE | 17.2% | 20.5% | 12.4% | 16.2% | 13.8% | -2.3% |
| Net Debt/EBITDA | 3.6x | 2.6x | 2.7x | 2.5x | 2.7x | 0.2x |
Peers in Tea & Coffee
Below we provide Tata Coffee benchmarking against other companies in Tea & Coffee 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 |
|---|
| Ccl Products (India) ($CCL) | - | 29.6% | 10.2% | 22.8% | 5.9% |
| Bombay Burmah Trading Corp ($BBTC) | 15.7% | 10.0% | 11.5% | 12.7% | - |
| Diana Tea Co ($DIANATEA) | -12.6% | -11.1% | 9.9% | 11.6% | - |
| Goodricke Group ($GOODRICKE) | 17.5% | 7.4% | 4.3% | 9.9% | - |
| Tata Global Beverages ($TATAGLOBAL) | - | 10.4% | 4.8% | 4.9% | -18.3% |
| |
|---|
| Median (10 companies) | 13.9% | 10.2% | 10.0% | 4.8% | -6.2% |
|---|
| Tata Coffee ($TATACOFFEE) | - | 7.3% | -3.0% | 5.1% | 4.2% |
Top companies by EBITDA margin, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Ccl Products (India) ($CCL) | 20.3% | 20.1% | 21.5% | 20.6% | 22.0% |
| B & A ($BNALTD) | 18.4% | 17.1% | 17.1% | 14.8% | - |
| Rossell India ($ROSSELLIND) | 31.0% | 27.5% | 26.5% | 14.7% | - |
| Bombay Burmah Trading Corp ($BBTC) | 6.0% | 6.8% | 8.6% | 10.5% | - |
| Tata Global Beverages ($TATAGLOBAL) | 9.5% | 10.6% | 9.9% | 9.7% | 10.0% |
| |
|---|
| Median (9 companies) | 8.7% | 13.8% | 13.5% | 9.7% | 10.0% |
|---|
| Tata Coffee ($TATACOFFEE) | 12.8% | 19.2% | 19.9% | 20.2% | 17.7% |
Top companies by CAPEX/Revenue, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Rossell India ($ROSSELLIND) | 11.0% | 6.7% | 14.8% | 11.1% | - |
| Mcleod Russel India ($MCLEODRUSS) | 10.0% | 6.0% | 9.4% | 9.8% | - |
| Andrew Yule & Company ($ANDREWYU) | 2.8% | 1.8% | 2.4% | 2.9% | - |
| Ccl Products (India) ($CCL) | 11.1% | 5.8% | 8.3% | 2.4% | 9.4% |
| Tata Global Beverages ($TATAGLOBAL) | 2.0% | 2.5% | 2.7% | 2.2% | 2.4% |
| |
|---|
| Median (6 companies) | 5.2% | 3.1% | 2.6% | 2.6% | 3.0% |
|---|
| Tata Coffee ($TATACOFFEE) | 3.2% | 4.3% | 4.0% | 3.6% | 3.6% |
Top companies by ROIC, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Bombay Burmah Trading Corp ($BBTC) | 10.7% | 13.9% | 20.6% | 23.7% | - |
| Ccl Products (India) ($CCL) | 16.1% | 18.0% | 19.7% | 23.0% | 25.7% |
| Tata Global Beverages ($TATAGLOBAL) | 8.2% | 9.6% | 8.1% | 8.0% | 6.5% |
| Rossell India ($ROSSELLIND) | - | 12.1% | 12.7% | 4.1% | - |
| Andrew Yule & Company ($ANDREWYU) | 4.0% | 3.7% | 6.5% | 2.6% | - |
| |
|---|
| Median (13 companies) | 10.7% | 13.3% | 14.8% | 6.0% | 6.5% |
|---|
| Tata Coffee ($TATACOFFEE) | 10.9% | 16.2% | 14.0% | 14.0% | 11.5% |
Top companies by Net Debt / EBITDA
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Mcleod Russel India ($MCLEODRUSS) | 0.4x | 0.5x | 0.7x | 4.2x | - |
| Rossell India ($ROSSELLIND) | 0.0x | 1.9x | 1.5x | 2.6x | - |
| Andrew Yule & Company ($ANDREWYU) | 2.1x | 5.4x | 1.9x | 1.7x | - |
| Ccl Products (India) ($CCL) | 2.6x | 2.3x | 1.7x | 1.1x | 0.7x |
| Tata Global Beverages ($TATAGLOBAL) | 1.4x | 1.5x | 1.0x | 1.0x | 1.3x |
| |
|---|
| Median (9 companies) | 1.4x | 1.7x | 0.4x | 1.0x | 1.3x |
|---|
| Tata Coffee ($TATACOFFEE) | 3.6x | 2.6x | 2.7x | 2.5x | 2.7x |
