Syndicate Bank reports 191% Net Income decline in 2016 while 8.4% Revenue growth

17-05-2016 • About Syndicate Bank ($SYNDIBANK) • By InTwits

Syndicate Bank reported FY2016 financial results today. Overall the company's long term financial model is characterised by the following facts:

Syndicate Bank is a fast growth stock: FY2016 revenue growth was 8.4%, 5 year revenue CAGR was 15.8% at FY2016 ROIC -2.0%
Syndicate Bank has low CAPEX intensity: 5 year average CAPEX/Revenue was 1.1%. At the same time it's in pair with industry average of 12.2%
CAPEX is quite volatile: ₹3,048m in FY2016, ₹3,543m in FY2015, ₹1,823m in FY2014, ₹2,127m in FY2013, ₹1,134m in FY2012
The company has unprofitable business model: ROIC is -2.0%
It operates with high leverage: Net Debt/EBITDA is 5.9x while industry average is

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 8.4%.

Net Income margin dropped on 12.9 pp from 7.0% to -5.9% in FY2016. During the last 5 years Net Income margin topped in FY2013 at 12.1% and was declining since that time.

Investments (CAPEX, working capital and M&A)

In FY2016 the company had CAPEX/Revenue of 1.2%. The company's CAPEX/Revenue showed almost no change from FY2013 to FY2016. It's average CAPEX/Revenue for the last three years was 1.2%.

Return on investment

The company operates at negative ROIC (-2.0%) and ROE (-10.6%). ROIC decreased on 4.1 pp from 2.1% to -2.0% in FY2016. ROE dropped on 22.8 pp from 12.2% to -10.6% in FY2016. During the last 5 years ROE topped in FY2013 at 21.1% and was declining since that time.

Leverage (Debt)

Debt dropped on 20.3% while cash surged on 11.4%.

Syndicate Bank has short term refinancing risk: cash is only 35.3% of short term debt.

Management team

Arun Shrivastava is a Syndicate Bank's CEO. Arun Shrivastava has spent 5 years with the company.

Financial and operational results

Syndicate Bank ($SYNDIBANK) key annual financial indicators

mln. INR	2012	2013	2014	2015	2016	2016/2015
P&L
Revenue	163,445	182,951	197,414	237,251	257,080	8.4%
Net Income	13,144	22,064	18,551	16,641	-15,172	-191.2%
Balance Sheet
Cash	88,086	80,953	127,120	119,745	133,386	11.4%
Short Term Debt	6,012	8,849	392,412	508,643	377,927	-25.7%
Long Term Debt	272,553	366,439	110,446	153,666	149,752	-2.5%
Cash flow
Capex	1,134	2,127	1,823	3,543	3,048	-14.0%
Ratios
Revenue growth	32.2%	11.9%	7.9%	20.2%	8.4%

Net Income Margin	8.0%	12.1%	9.4%	7.0%	-5.9%	-12.9%
CAPEX, % of revenue	0.7%	1.2%	0.9%	1.5%	1.2%	-0.3%

ROIC		3.5%	2.8%	2.1%	-2.0%	-4.1%
ROE	16.3%	21.1%	14.9%	12.2%	-10.6%	-22.8%

Peers in Banks

Below we provide Syndicate Bank benchmarking against other companies in Banks 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
Kotak Mahindra Bank ($KOTAKBANK)	-	22.9%	7.1%	26.1%	29.2%
Dcb Bank ($DCBBANK)	-	26.2%	22.5%	25.3%	20.8%
Yes Bank ($YESBANK)	-	33.7%	21.6%	17.7%	18.9%
Axis Bank ($AXISBANK)	-	24.5%	13.1%	15.6%	14.9%
Andhra Bank ($ANDHRABANK)	-	15.4%	13.0%	14.5%	5.4%
Median (28 companies)	32.0%	16.7%	11.2%	10.2%	3.7%
Syndicate Bank ($SYNDIBANK)	-	11.9%	7.9%	20.2%	8.4%

Top companies by CAPEX/Revenue, %


Top 5	FY2012	FY2013	FY2014	FY2015	FY2016
Bank Of India ($BANKINDIA)	2.0%	1.1%	1.5%	3.6%	-
State Bank Of Mysore ($MYSOREBANK)	1.6%	1.3%	-	3.5%	1.4%
Jammu & Kashmir Bank ($J&KBANK)	1.4%	1.3%	2.2%	3.3%	-
Lakshmi Vilas Bank ($LAKSHVILAS)	2.1%	1.4%	1.6%	2.4%	2.4%
Dcb Bank ($DCBBANK)	9.0%	7.0%	1.6%	1.9%	2.2%
Median (28 companies)	1.3%	1.2%	1.3%	1.3%	1.3%
Syndicate Bank ($SYNDIBANK)	0.7%	1.2%	0.9%	1.5%	1.2%

Top companies by ROIC, %


Top 5	FY2012	FY2013	FY2014	FY2015	FY2016
Karnataka Bank ($KTKBANK)	6.8%	10.2%	7.7%	10.4%	-
Axis Bank ($AXISBANK)	9.6%	8.9%	9.1%	8.8%	7.6%
Yes Bank ($YESBANK)	9.8%	8.4%	8.4%	8.7%	9.0%
Kotak Mahindra Bank ($KOTAKBANK)	6.8%	6.5%	7.1%	8.5%	7.3%
Lakshmi Vilas Bank ($LAKSHVILAS)	6.5%	7.5%	0.7%	6.1%	5.8%
Median (28 companies)	7.6%	6.5%	3.4%	4.5%	4.0%
Syndicate Bank ($SYNDIBANK)	-	3.5%	2.8%	2.1%	-2.0%

Syndicate Bank stock price chart

Syndicate Bank financials

mln.	FY2010	FY2011	FY2012

Revenue	384,333	123,663	163,445
EBITDA	0.000	0.000	0.000
Net income	8,143	10,492	13,144
CAPEX	612.6	725.5	1,134
Debt	309,133	242,420	278,565
Cash	71,891	104,431	88,086

About Syndicate Bank

Syndicate Bank Limited provides a range of banking products and services to corporate, small to medium-sized enterprises, and retail customers in India. The company offers deposit services, including savings bank accounts, current accounts, and term deposits. It also provides housing loans, retail trade loans, vehicle loans, consumer loans, education loans, mortgage loans, investment loans, and short-term loans to the agricultural sector and for associated activities. In addition, the company offers a range of services comprising credit and debit cards, locker facilities, cash management services, remittance services, and direct tax collections. Further, it provides e-payment services; back office services to its clients and other financial institutions; and Internet, mobile, and SMS banking services; life and non-life insurance products; and mutual fund services. Additionally, Syndicate Bank Limited offers outsourcing service, such as hardware testing, retail loan follow-up, card personalization, and database services. As of September 22, 2014, it operated 3,300 branches. The company was formerly known as Canara Industrial and Banking Syndicate, Ltd. Syndicate Bank Limited was founded in 1925 and is headquartered in Manipal, India.