Jsw Steel reports 35.2% EBITDA decline in 2016 and 3.2 pp EBITDA Margin decline from 17.7% to 14.6%
18-05-2016 • About Jsw Steel (
$JSWSTEEL) • By InTwits
Jsw Steel reported FY2016 financial results today. Here are the key drivers of the company's long term financial model:
- Jsw Steel has high CAPEX intensity: 5 year average CAPEX/Revenue was 12.6%. At the same time it's a lot of higher than industry average of 7.7%.
- CAPEX is quite volatile: ₹39,891m in FY2016, ₹59,776m in FY2015, ₹94,236m in FY2014, ₹118,710m in FY2013, ₹125,119m in FY2012
- The company has potentially unprofitable business model: ROIC is 4.8%
- It operates with high leverage: Net Debt/EBITDA is 6.5x while industry average is 12.8x
Below you can find a comprehensive analysis of the key data driving the company's performance and the stock price.
Revenue and profitability
Jsw Steel's Revenue dropped on 20.9%. Revenue decline was worsened by EBITDA margin decline. EBITDA Margin decreased on 3.2 pp from 17.7% to 14.6% in FY2016.
Net Income margin decreased on 5.2 pp from 3.4% to -1.8% in FY2016.
Investments (CAPEX, working capital and M&A)
The company's CAPEX/Revenue was 12.4% in FY2016. CAPEX/Revenue decreased on 2.4 pp from 14.7% in FY2013 to 12.4% in FY2016. It's average CAPEX/Revenue for the last three years was 12.1%. Jsw Steel invested a big chunk of EBITDA (85.0%) to CAPEX which didn't stop revenue from falling.
Return on investment
The company operates at low but positive ROIC (4.8%) and negative ROE (-3.7%). ROIC decreased on 5.1 pp from 9.9% to 4.8% in FY2016. ROE dropped on 11.8 pp from 8.1% to -3.7% in FY2016.
Leverage (Debt)
Company's Net Debt / EBITDA is 6.5x and Debt / EBITDA is 6.6x. Net Debt / EBITDA surged on 2.6x from 3.8x to 6.5x in FY2016. Debt increased on 5.8% while cash dropped on 61.6%. During FY2012-FY2016 Net Debt/EBITDA bottomed in FY2013 at 3.3x and was growing since that time.
Jsw Steel has short term refinancing risk: cash is only 9.9% of short term debt.
Management team
Seshagiri Rao Mvs is a the company's CFO. Seshagiri Rao Mvs has spent 23 years at the company.
Financial and operational results
Jsw Steel ($JSWSTEEL) key annual financial indicators| mln. INR | 2012 | 2013 | 2014 | 2015 | 2016 | 2016/2015 |
|---|
P&L
|
|---|
| Revenue | 343,681 | 382,097 | 512,196 | 529,715 | 418,789 | -20.9% |
| EBITDA | 61,154 | 65,205 | 91,686 | 94,023 | 60,943 | -35.2% |
| Net Income | 5,377 | 9,631 | 4,520 | 17,966 | -7,420 | -141.3% |
Balance Sheet
|
|---|
| Cash | 2,639 | 3,256 | 6,630 | 19,133 | 7,340 | -61.6% |
| Short Term Debt | 78,240 | 42,974 | 48,871 | 43,132 | 74,122 | 71.9% |
| Long Term Debt | 128,891 | 173,932 | 267,026 | 336,766 | 327,932 | -2.6% |
Cash flow
|
|---|
| Capex | 40,795 | 56,301 | 57,629 | 67,206 | 51,787 | -22.9% |
Ratios
|
|---|
| Revenue growth | 42.6% | 11.2% | 34.0% | 3.4% | -20.9% | |
| EBITDA growth | 25.3% | 6.6% | 40.6% | 2.5% | -35.2% | |
|
|---|
| EBITDA Margin | 17.8% | 17.1% | 17.9% | 17.7% | 14.6% | -3.2% |
| Net Income Margin | 1.6% | 2.5% | 0.9% | 3.4% | -1.8% | -5.2% |
| CAPEX, % of revenue | 11.9% | 14.7% | 11.3% | 12.7% | 12.4% | -0.3% |
|
|---|
| ROIC | 11.0% | 10.3% | 12.1% | 9.9% | 4.8% | -5.1% |
| ROE | 3.1% | 5.6% | 2.2% | 8.1% | -3.7% | -11.8% |
| Net Debt/EBITDA | 3.3x | 3.3x | 3.4x | 3.8x | 6.5x | 2.6x |
Peers in Iron & Steel/Interm.Products
Below you can find Jsw Steel benchmarking vs. other companies in Iron & Steel/Interm.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 |
|---|
| Uttam Galva Steels ($UTTAMSTL) | 12.0% | 11.0% | -13.2% | 55.0% | - |
| Modern Steels ($MDRNSTL) | -2.6% | -22.7% | 0.7% | 20.3% | - |
| Maithan Alloys ($MAITHANALL) | - | 59.1% | 1.1% | 15.0% | 4.0% |
| Pennar Industries ($PENIND) | 0.9% | -8.5% | 0.5% | 12.7% | - |
| Vaswani Industries ($VASWANI) | 51.4% | -2.1% | 5.6% | 12.6% | - |
| |
|---|
| Median (32 companies) | 14.6% | 3.2% | 2.8% | -1.6% | -15.4% |
|---|
| Jsw Steel ($JSWSTEEL) | - | 11.2% | 34.0% | 3.4% | -20.9% |
Top companies by EBITDA margin, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Jindal Steel & Power ($JINDALSTEL) | 37.5% | 30.5% | 28.1% | 29.8% | 17.2% |
| Sarda Energy & Minerals ($SARDAEN) | 16.3% | 21.5% | 21.3% | 21.5% | - |
| Bhushan Steel ($BHUSANSTL) | 31.2% | 32.3% | 28.1% | 20.4% | - |
| Tata Metaliks ($TATAMETALI) | -9.6% | 0.9% | 6.8% | 14.6% | 16.8% |
| Jai Corp ($JAICORPLTD) | 14.1% | 16.3% | 16.0% | 12.7% | - |
| |
|---|
| Median (29 companies) | 9.4% | 9.0% | 7.0% | 7.3% | 13.6% |
|---|
| Jsw Steel ($JSWSTEEL) | 17.8% | 17.1% | 17.9% | 17.7% | 14.6% |
Top companies by CAPEX/Revenue, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Jindal Steel & Power ($JINDALSTEL) | 34.2% | 47.6% | 69.6% | 26.4% | 21.8% |
| Jayaswal Neco Industries ($JAYNECOIND) | 20.4% | 44.0% | 31.1% | 17.3% | - |
| Steel Authority Of India ($SAIL) | 20.9% | 20.7% | 19.3% | 16.9% | 17.3% |
| Bhushan Steel ($BHUSANSTL) | 47.2% | 44.0% | 50.4% | 16.2% | - |
| Tata Steel ($TATASTEEL) | 9.1% | 11.6% | 11.1% | 9.8% | 9.6% |
| |
|---|
| Median (17 companies) | 7.5% | 10.4% | 6.6% | 4.4% | 7.9% |
|---|
| Jsw Steel ($JSWSTEEL) | 11.9% | 14.7% | 11.3% | 12.7% | 12.4% |
Top companies by ROIC, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Tata Metaliks ($TATAMETALI) | -23.5% | -3.7% | 19.9% | 57.4% | 42.6% |
| Pennar Industries ($PENIND) | 26.8% | 18.4% | 12.3% | 15.7% | - |
| Maithan Alloys ($MAITHANALL) | 16.3% | 15.1% | 5.5% | 15.3% | 19.0% |
| Kirloskar Ferrous Industries ($KIRLFER) | 19.1% | 16.8% | 12.4% | 14.7% | 15.9% |
| Gallantt Metal ($GALLANTT) | 8.7% | 11.7% | 8.5% | 11.7% | - |
| |
|---|
| Median (40 companies) | 6.8% | 5.5% | 5.5% | 4.6% | 9.0% |
|---|
| Jsw Steel ($JSWSTEEL) | 11.0% | 10.3% | 12.1% | 9.9% | 4.8% |
Top companies by Net Debt / EBITDA
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Visa Steel ($VISASTEEL) | 20.1x | - | 24.4x | 187.1x | - |
| Ismt ($ISMTLTD) | 5.3x | 9.8x | 19.9x | 48.3x | - |
| Kic Metaliks ($KAJARIR) | 9.2x | 3.0x | 18.2x | 19.8x | - |
| Bhushan Steel ($BHUSANSTL) | 6.3x | 8.6x | 12.9x | 17.7x | - |
| Prakash Industries ($PRAKASH) | 2.5x | 2.8x | 2.5x | 11.9x | - |
| |
|---|
| Median (26 companies) | 4.6x | 4.4x | 3.2x | 1.7x | 0.8x |
|---|
| Jsw Steel ($JSWSTEEL) | 3.3x | 3.3x | 3.4x | 3.8x | 6.5x |
