Action Construction Equipment EBITDA jumped on 59.9% and Revenue increased on 6.4%

19-05-2016 • About Action Construction Equipment ($ACE) • By InTwits

Action Construction Equipment reported FY2016 financial results today. Here are the key drivers of the company's long term financial model:

Action Construction Equipment has medium CAPEX intensity: 5 year average CAPEX/Revenue was 6.4%. At the same time it's in pair with industry average of 6.0%
CAPEX is quite volatile: ₹388m in FY2016, ₹357m in FY2015, ₹281m in FY2014, ₹432m in FY2013, ₹749m in FY2012
The company has potentially unprofitable business model: ROIC is 4.6%
It operates with high leverage: Net Debt/EBITDA is 3.6x while industry average is 2.0x

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 increased on 6.4%. During FY2012-FY2016 Revenue growth bottomed in FY2013 at -22.1% and was accelerating since that time. Having declining revenue the company managed to increase EBITDA margin. EBITDA Margin increased on 3.7 pp from 3.5% to 7.1% in FY2016. During the last 5 years EBITDA Margin bottomed in FY2015 at 3.3%.

Net Income margin showed almost no change in FY2016. During the last 5 years Net Income margin bottomed in FY2014 at 0.75% and was growing since that time.

Investments (CAPEX, working capital and M&A)

In FY2016 the company had CAPEX/Revenue of 6.1%. Action Construction Equipment's CAPEX/Revenue showed almost no change from FY2013 to FY2016. It's average CAPEX/Revenue for the last three years was 5.5%. The company investments to CAPEX were large: 122% of EBITDA. During the last 5 years CAPEX as a % of Revenue bottomed in FY2014 at 4.6% and was growing since that time.

Return on investment

The company operates at low ROIC (4.6%) and ROE (3.4%). ROIC increased on 2.2 pp from 2.4% to 4.6% in FY2016. ROE increased slightly on 1.1 pp from 2.3% to 3.4% in FY2016. During the last 5 years ROIC bottomed in FY2014 at 2.2% and was growing since that time. During the last 5 years ROE bottomed in FY2014 at 1.6% and was growing since that time.

Leverage (Debt)

Company's Net Debt / EBITDA is 3.6x and Debt / EBITDA is 3.9x. Net Debt / EBITDA dropped on 2.8x from 6.3x to 3.6x in FY2016. Debt decreased on 9.8% while cash dropped on 12.7%. During FY2012-FY2016 Net Debt/EBITDA topped in FY2015 at 6.3x.

Action Construction Equipment has short term refinancing risk: cash is only 9.8% of short term debt.

Financial and operational results

Action Construction Equipment ($ACE) key annual financial indicators

mln. INR	2012	2013	2014	2015	2016	2016/2015
P&L
Revenue	8,489	6,616	6,103	5,992	6,373	6.4%
EBITDA	549	369	249	199	318	59.9%
Net Income	283	74	46	66	99	49.7%
Balance Sheet
Cash	25	16	13	113	99	-12.7%
Short Term Debt	1,206	1,330	1,020	1,060	1,003	-5.4%
Long Term Debt	245	232	395	317	240	-24.5%
Cash flow
Capex	749	432	281	357	388	8.7%
Ratios
Revenue growth	22.2%	-22.1%	-7.8%	-1.8%	6.4%
EBITDA growth	-7.2%	-32.8%	-32.4%	-20.1%	59.9%

EBITDA Margin	6.5%	5.6%	4.1%	3.3%	5.0%	1.7%
Net Income Margin	3.3%	1.1%	0.8%	1.1%	1.6%	0.5%
CAPEX, % of revenue	8.8%	6.5%	4.6%	6.0%	6.1%	0.1%

ROIC	10.9%	5.2%	2.2%	2.4%	4.6%	2.2%
ROE	10.6%	2.6%	1.6%	2.3%	3.4%	1.1%
Net Debt/EBITDA	2.6x	4.2x	5.6x	6.3x	3.6x	-2.8x

Peers in Transport Related Services

Below we provide Action Construction Equipment benchmarking against other companies in Transport Related Services 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	FY2012	FY2013	FY2014	FY2015	FY2016
Sanghvi Movers ($SANGHVIMOV)	24.7%	-26.3%	-27.2%	26.6%	-
Container Corporation Of India ($CONCOR)	5.2%	8.4%	19.6%	13.0%	-
Til ($TIL)	0.4%	-15.1%	11.8%	12.1%	-
Median (3 companies)	5.2%	-15.1%	11.8%	13.0%	-
Action Construction Equipment ($ACE)	-	-22.1%	-7.8%	-1.8%	6.4%

Top companies by EBITDA margin, %


Top	FY2012	FY2013	FY2014	FY2015	FY2016
Sanghvi Movers ($SANGHVIMOV)	70.1%	69.8%	57.9%	58.3%	-
Container Corporation Of India ($CONCOR)	24.9%	23.6%	22.5%	23.4%	-
Til ($TIL)	5.4%	7.0%	8.2%	10.1%	-
Kernex Microsystems (India) ($KERNEX)	-	-	-	-35.3%	-
Median (4 companies)	24.9%	23.6%	22.5%	16.7%	-
Action Construction Equipment ($ACE)	6.5%	5.6%	4.1%	3.3%	5.0%

Top companies by CAPEX/Revenue, %


Top	FY2012	FY2013	FY2014	FY2015	FY2016
Sanghvi Movers ($SANGHVIMOV)	51.3%	2.8%	3.9%	16.6%	-
Container Corporation Of India ($CONCOR)	5.6%	13.3%	9.3%	14.1%	-
Til ($TIL)	11.7%	5.6%	2.7%	3.4%	-
Median (3 companies)	11.7%	5.6%	3.9%	14.1%	-
Action Construction Equipment ($ACE)	8.8%	6.5%	4.6%	6.0%	6.1%

Top companies by ROIC, %


Top	FY2012	FY2013	FY2014	FY2015	FY2016
Container Corporation Of India ($CONCOR)	15.5%	14.1%	14.2%	13.3%	-
Til ($TIL)	6.8%	5.7%	7.7%	10.7%	-
Sanghvi Movers ($SANGHVIMOV)	15.3%	8.1%	1.7%	5.0%	-
Kernex Microsystems (India) ($KERNEX)	5.7%	-	-	-	-
Median (4 companies)	11.0%	8.1%	7.7%	10.7%	-
Action Construction Equipment ($ACE)	10.9%	5.2%	2.2%	2.4%	4.6%

Top companies by Net Debt / EBITDA


Top	FY2012	FY2013	FY2014	FY2015	FY2016
Til ($TIL)	4.6x	5.8x	5.1x	4.5x	-
Sanghvi Movers ($SANGHVIMOV)	2.2x	2.5x	3.3x	1.7x	-
Container Corporation Of India ($CONCOR)	-0.8x	-1.0x	-2.2x	-2.0x	-
Median (3 companies)	2.1x	1.2x	3.3x	1.7x	-
Action Construction Equipment ($ACE)	2.6x	4.2x	5.6x	6.3x	3.6x

Action Construction Equipment stock price chart

Action Construction Equipment financials

mln.	FY2010	FY2011	FY2012

Revenue	7,325	6,949	8,489
EBITDA	368.3	591.5	548.6
Net income	235.6	416.3	283.3
CAPEX	124.9	331.5	749.3
Debt	301.8	715.0	1,451
Cash	12.970	245.3	24.836

About Action Construction Equipment

Action Construction Equipment Limited manufactures and supplies material handling and construction equipments in India. The company operates through Cranes, Material Handling/Construction Equipment, and Agri Equipment segments. It offers mobile cranes, such as pick and move, crawler, and truck mounted cranes; tower cranes; backhoes and loaders; road constructions equipments, including rollers and graders; forklifts and tele handlers; and agriculture equipments, such as tractors, harvester combines, rice planters, and implements. The company serves various sectors comprising infrastructure construction, power projects, ports and shipyards, dams, metro rail, roads, mining, steel and engineering industry, railways, cement, petroleum, defense, chemicals and fertilizer plants, warehousing, logistics, building construction, etc. Action Construction Equipment Limited also exports it machines to the United Arab Emirates, Saudi Arabia, Qatar, Bahrain, Kuwait, Iran, Portugal, Australia, South Africa, Kenya, Nigeria, Mozambique, Ethiopia, Algeria, Libya, Mauritius, Madagascar, Sri Lanka, Nepal, Bangladesh, Bhutan, Malaysia, Singapore, New Zealand, Sri Lanka, Kazakhstan, and Romania. The company was incorporated in 1995 and is based in Palwal, India.