Aditya Birla Nuvo reports 74.6% CAPEX growth in 2016 while 12.8% Revenue decline

20-05-2016 • About Aditya Birla Nuvo ($ABIRLANUVO) • By InTwits

Aditya Birla Nuvo reported FY2016 financial results today. Here are the key drivers of the company's long term financial model:

EBITDA Margin is expanding: 26.5% in FY2016 vs. 20.4% in FY2015 vs. 13.5% in FY2012
Aditya Birla Nuvo has high CAPEX intensity: 5 year average CAPEX/Revenue was 10.6%. At the same time it's in pair with industry average of 12.2%
CAPEX is quite volatile: ₹33,180m in FY2016, ₹19,003m in FY2015, ₹44,275m in FY2014, ₹16,609m in FY2013, ₹16,701m in FY2012
The company has business model with low profitability: ROIC is 9.3%
It operates with high leverage: Net Debt/EBITDA is 5.9x while industry average is 2.4x

Below you can find a comprehensive analysis of the key data driving the company's performance and the stock price.

Revenue and profitability

Aditya Birla Nuvo's Revenue dropped on 12.8%. Revenue decline was accelerating on average at -8.3 pp per annum in the last 5 years. Revenue decline happened at the same time with EBITDA margin expansion. EBITDA Margin increased on 6.1 pp from 20.4% to 26.5% in FY2016. EBITDA Margin stuck to a growing trend at 3.2 pp per annum in the last 5 years.

SG&A as a % of Revenue decreased slightly on 1.0 pp from 2.5% to 1.5% in FY2016.

Net Income margin increased on 2.8 pp from 5.3% to 8.2% in FY2016. Net Income margin pursued a growing trend in FY2012-FY2016.

Investments (CAPEX, working capital and M&A)

In FY2016 the company had CAPEX/Revenue of 14.3%. Aditya Birla Nuvo showed CAPEX/Revenue growth of 7.8 pp from 6.5% in FY2013 to 14.3% in FY2016. It's average level of CAPEX/Revenue for the last three years was 12.9%. Battling declining revenue Aditya Birla Nuvo invested a large share of EBITDA (54.2%) to CAPEX but that didn't help at least in this year.

Return on investment

The company operates at good ROE (13.8%) while ROIC is low (9.3%). ROIC decreased slightly on 0.98 pp from 10.3% to 9.3% in FY2016. ROE increased slightly on 2.0 pp from 11.8% to 13.8% in FY2016. During FY2012-FY2016 ROE bottomed in FY2014 at 11.1% and was growing since that time.

Leverage (Debt)

Debt level is 5.9x Net Debt / EBITDA and 6.1x Debt / EBITDA. Net Debt / EBITDA jumped on 1.3x from 4.6x to 5.9x in FY2016. Debt surged on 41.6% while cash dropped on 21.2%. Net Debt/EBITDA followed a growing trend at 0.6x per annum in FY2012-FY2016.

Aditya Birla Nuvo has short term refinancing risk: cash is only 6.8% of short term debt.

Management team

The company's CFO Pinky Mehta has spent 5 years with the company.

Financial and operational results

Aditya Birla Nuvo ($ABIRLANUVO) key annual financial indicators

mln. INR	2012	2013	2014	2015	2016	2016/2015
P&L
Revenue	218,403	254,902	258,915	265,155	231,290	-12.8%
SG&A			5,942	6,739	3,455	-48.7%
EBITDA	29,383	37,892	45,864	53,971	61,200	13.4%
Net Income	8,901	10,589	11,429	14,155	18,858	33.2%
Balance Sheet
Cash	13,148	8,275	7,155	11,247	8,867	-21.2%
Short Term Debt	56,849	71,667	65,343	111,816	130,926	17.1%
Long Term Debt	52,835	88,870	118,956	150,366	240,440	59.9%
Cash flow
Capex	16,701	16,609	44,275	19,003	33,180	74.6%
Ratios
Revenue growth	21.3%	16.7%	1.6%	2.4%	-12.8%
EBITDA growth	-4.1%	29.0%	21.0%	17.7%	13.4%

EBITDA Margin	13.5%	14.9%	17.7%	20.4%	26.5%	6.1%
SG&A, % of revenue			2.3%	2.5%	1.5%	-1.0%
Net Income Margin	4.1%	4.2%	4.4%	5.3%	8.2%	2.8%
CAPEX, % of revenue	7.6%	6.5%	17.1%	7.2%	14.3%	7.2%

ROIC	10.3%	10.8%	10.3%	10.3%	9.3%	-1.0%
ROE	12.6%	12.5%	11.1%	11.8%	13.8%	2.0%
Net Debt/EBITDA	3.3x	4.0x	3.9x	4.6x	5.9x	1.3x

Peers in Diversified

Below we provide Aditya Birla Nuvo benchmarking against other companies in Diversified 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
3M India ($3MINDIA)	17.9%	12.0%	8.5%	7.7%	-
Dcm Shriram ($DCMSHRIRAM)	-	10.2%	11.6%	-9.0%	3.4%
Mercator ($MERCATOR)	30.8%	0.9%	-7.4%	-10.6%	-
Median (3 companies)	24.4%	10.2%	8.5%	-9.0%	3.4%
Aditya Birla Nuvo ($ABIRLANUVO)	-	16.7%	1.6%	2.4%	-12.8%

Top companies by EBITDA margin, %


Top 5	FY2012	FY2013	FY2014	FY2015	FY2016
Swasti Vinayaka Art And Heritage Corporation ($SVARTCORP)	-	-	-	38.3%	-
Mercator ($MERCATOR)	15.8%	13.6%	18.6%	17.1%	-
3M India ($3MINDIA)	8.7%	7.3%	7.2%	11.1%	-
Raja Bahadur International ($RAJABAH)	-	-	-	9.0%	-
Dcm Shriram ($DCMSHRIRAM)	6.9%	10.0%	8.4%	7.3%	8.5%
Median (5 companies)	8.7%	10.0%	8.4%	11.1%	8.5%
Aditya Birla Nuvo ($ABIRLANUVO)	13.5%	14.9%	17.7%	20.4%	26.5%

Top companies by CAPEX/Revenue, %


Top	FY2012	FY2013	FY2014	FY2015	FY2016
Mercator ($MERCATOR)	7.4%	2.0%	11.4%	26.4%	-
Dcm Shriram ($DCMSHRIRAM)	1.3%	1.4%	1.5%	1.9%	8.0%
3M India ($3MINDIA)	0.0%	0.0%	0.0%	0.0%	-
Median (3 companies)	1.3%	1.4%	1.5%	1.9%	8.0%
Aditya Birla Nuvo ($ABIRLANUVO)	7.6%	6.5%	17.1%	7.2%	14.3%

Top companies by ROIC, %


Top 5	FY2012	FY2013	FY2014	FY2015	FY2016
3M India ($3MINDIA)	15.5%	10.4%	8.9%	18.1%	-
Dcm Shriram ($DCMSHRIRAM)	5.9%	12.3%	12.1%	10.3%	12.9%
Mercator ($MERCATOR)	3.4%	1.0%	3.5%	0.9%	-
Advanced Micronic Devices ($ADVNCMIC)	9.1%	-2.8%	-	-	-
Raja Bahadur International ($RAJABAH)	-	-	-	-	-
Median (6 companies)	9.1%	5.7%	8.9%	10.3%	12.9%
Aditya Birla Nuvo ($ABIRLANUVO)	10.3%	10.8%	10.3%	10.3%	9.3%

Top companies by Net Debt / EBITDA


Top 5	FY2012	FY2013	FY2014	FY2015	FY2016
Mercator ($MERCATOR)	4.9x	5.4x	4.7x	6.9x	-
Dcm Shriram ($DCMSHRIRAM)	4.7x	2.6x	1.7x	1.6x	2.1x
Raja Bahadur International ($RAJABAH)	-	-	-	0.0x	-
Swasti Vinayaka Art And Heritage Corporation ($SVARTCORP)	2.8x	0.0x	0.0x	0.0x	-
3M India ($3MINDIA)	0.2x	1.0x	0.5x	-0.5x	-
Median (5 companies)	4.5x	2.6x	1.1x	0.0x	2.1x
Aditya Birla Nuvo ($ABIRLANUVO)	3.3x	4.0x	3.9x	4.6x	5.9x

Aditya Birla Nuvo stock price chart

Aditya Birla Nuvo financials

mln.	FY2010	FY2011	FY2012

Revenue	446,166	179,995	218,403
EBITDA	14,549	30,645	29,383
Net income	1,546	8,221	8,901
CAPEX	14,661	28,815	16,701
Debt	74,803	93,009	109,684
Cash	7,327	8,014	13,148

About Aditya Birla Nuvo

Aditya Birla Nuvo Limited, together with its subsidiaries, is engaged in the financial services, telecom, fashion and lifestyle, and manufacturing businesses worldwide. It provides life insurance products comprising protection, children's future, wealth with protection, and health and wellness solutions, as well as retirement solutions; and other financial services, such as asset management, non-bank financial services, private equity, equity and commodity broking, wealth management, and general insurance advisory services. The company also offers GSM mobile telephony services under the Idea brand; and fashion and lifestyle products, including branded apparels and accessories under the Louis Philippe, Van Heusen, Allen Solly, Peter England, Planet Fashion, Collective, People, and Pantaloons brands. In addition, the company manufactures and retails linen fabric, linen yarn, worsted yarn, and wool tops through Linen Club stores. Further, it manufactures and sells urea, agricultural seeds, and agrochemicals; viscose filament yarn under the Ray One brand; caustic soda for various applications; and insulators that are used by power utilities and multinational companies in sub-station and transmission systems. The company was formerly known as Indian Rayon And Industries Limited and changed its name to Aditya Birla Nuvo Limited in November 2005. Aditya Birla Nuvo Limited was incorporated in 1956 and is based in Mumbai, India.