Deccan Cements Net Income surged on 129% and EBITDA Margin increased on 4.9 pp from 14.9% to 19.9%
20-05-2016 • About Deccan Cements (
$DECCANCE) • By InTwits
Deccan Cements reported FY2016 financial results today. Here are the key drivers of the company's long term financial model:
- Deccan Cements is a growth stock: FY2016 revenue growth was 32.3%, 5 year revenue CAGR was 11.3% at FY2016 ROIC 20.8%
- Deccan Cements has low CAPEX intensity: 5 year average CAPEX/Revenue was 1.4%. At the same time it's a lot of higher than industry average of 5.3%.
- CAPEX is quite volatile: ₹82m in FY2016, ₹53m in FY2015, ₹20m in FY2014, ₹160m in FY2013, ₹27m in FY2012
- The company has highly profitable business model: ROIC is 20.8%
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 jumped on 32.3%. During the last 5 years Revenue growth bottomed in FY2014 at -21.6% and was accelerating since that time. Having declining revenue the company managed to increase EBITDA margin. EBITDA Margin increased on 4.4 pp from 82.4% to 86.8% in FY2016. During the last 5 years EBITDA Margin bottomed in FY2013 at 13.2% and was growing since that time.
Net Income margin increased on 3.3 pp from 4.5% to 7.9% in FY2016. During the last 5 years Net Income margin bottomed in FY2014 at 1.3% and was growing since that time.
Investments (CAPEX, working capital and M&A)
In FY2016 the company had CAPEX/Revenue of 1.4%. Deccan Cements showed small CAPEX/Revenue decline of 1.8 pp from 3.2% in FY2013 to 1.4% in FY2016. It's average CAPEX/Revenue for the last three years was 1.0%.
Return on investment
The company operates at high and attractive ROIC (20.8%) while ROE is a bit lower (17.2%). ROIC surged on 11.6 pp from 9.1% to 20.8% in FY2016. ROE increased on 8.8 pp from 8.4% to 17.2% in FY2016. During the last 5 years ROIC bottomed in FY2014 at 6.4% and was growing since that time. During the last 5 years ROE bottomed in FY2014 at 2.2% and was growing since that time.
Leverage (Debt)
Company's Net Debt / EBITDA is 0.4x and Debt / EBITDA is 0.7x. Net Debt / EBITDA dropped on 2.1x from 2.5x to 0.4x in FY2016. Debt dropped on 58.3% while cash surged on 33.3%. During FY2012-FY2016 Net Debt/EBITDA topped in FY2014 at 3.4x and was declining since that time.
Deccan Cements has no short term refinancing risk: cash is higher than short term debt (101.5%).
Valuation and dividends
The company's trades at EV/EBITDA 4.9x and P/E 11.3x while industy averages are 17.8x and 21.9x. Deccan Cements's EV/(EBITDA-CAPEX) is 5.3x with the industry average at 22.8x.
Financial and operational results
Deccan Cements ($DECCANCE) key annual financial indicators| mln. INR | 2012 | 2013 | 2014 | 2015 | 2016 | 2016/2015 |
|---|
P&L
|
|---|
| Revenue | 5,098 | 4,991 | 3,914 | 4,378 | 5,791 | 32.3% |
| EBITDA | 1,163 | 659 | 574 | 654 | 1,150 | 75.8% |
| Net Income | 478 | 73 | 50 | 199 | 456 | 129.2% |
Balance Sheet
|
|---|
| Cash | 558 | 214 | 433 | 263 | 350 | 33.3% |
| Short Term Debt | 351 | 323 | 675 | 745 | 345 | -53.7% |
| Long Term Debt | 2,237 | 2,056 | 1,716 | 1,163 | 450 | -61.3% |
Cash flow
|
|---|
| Capex | 27 | 160 | 20 | 53 | 82 | 54.4% |
Ratios
|
|---|
| Revenue growth | 50.6% | -2.1% | -21.6% | 11.9% | 32.3% | |
| EBITDA growth | 78.9% | -43.4% | -12.9% | 14.0% | 75.8% | |
|
|---|
| EBITDA Margin | 22.8% | 13.2% | 14.7% | 14.9% | 19.9% | 4.9% |
| Net Income Margin | 9.4% | 1.5% | 1.3% | 4.5% | 7.9% | 3.3% |
| CAPEX, % of revenue | 0.5% | 3.2% | 0.5% | 1.2% | 1.4% | 0.2% |
|
|---|
| ROIC | 17.4% | 8.0% | 6.4% | 9.1% | 20.8% | 11.6% |
| ROE | 24.3% | 3.3% | 2.2% | 8.4% | 17.2% | 8.8% |
| Net Debt/EBITDA | 1.7x | 3.3x | 3.4x | 2.5x | 0.4x | -2.1x |
Peers in Cement & Cement Products
Below you can find Deccan Cements benchmarking vs. other companies in Cement & Cement 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 |
|---|
| Ncl Industries ($NCLIND) | 38.2% | -15.8% | -3.0% | 30.8% | - |
| Indian Hume Pipe Co ($INDIANHUME) | - | 34.5% | 18.3% | 22.7% | -7.2% |
| J.K.Cement ($JKCEMENT) | 21.8% | 14.7% | -4.0% | 21.2% | - |
| Visaka Industries ($VIKASAS) | - | 22.0% | -2.6% | 13.6% | -0.8% |
| Prism Cement ($PRISMCEM) | 33.2% | 4.9% | 5.3% | 12.5% | - |
| |
|---|
| Median (16 companies) | 18.4% | 11.7% | 1.8% | 6.2% | -1.6% |
|---|
| Deccan Cements ($DECCANCE) | - | -2.1% | -21.6% | 11.9% | 32.3% |
Top companies by EBITDA margin, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Orient Cement ($ORIENTCEM) | - | 21.5% | 15.0% | 19.8% | 12.2% |
| Saurashtra Cement ($SAURASHCEM) | 11.4% | 21.6% | 11.9% | 16.8% | - |
| Ambuja Cements ($AMBUJACEM) | 25.6% | 18.2% | 19.4% | 16.4% | - |
| India Cements ($INDIACEM) | 20.6% | 18.4% | 12.4% | 15.1% | - |
| Acc ($ACC) | 19.3% | 14.6% | 12.9% | 14.4% | - |
| |
|---|
| Median (15 companies) | 16.2% | 14.1% | 11.7% | 11.0% | 10.0% |
|---|
| Deccan Cements ($DECCANCE) | 22.8% | 13.2% | 14.7% | 14.9% | 19.9% |
Top companies by CAPEX/Revenue, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Udaipur Cement Works ($UDAICEMENT) | - | - | - | 91.1% | - |
| Orient Cement ($ORIENTCEM) | - | 2.9% | - | 59.7% | 24.5% |
| J.K.Cement ($JKCEMENT) | 6.5% | 18.8% | 55.8% | 16.2% | - |
| Acc ($ACC) | 5.0% | 8.6% | 13.7% | 9.5% | - |
| Birla Corporation ($BIRLACORPN) | 19.1% | 7.1% | 5.5% | 6.9% | 5.1% |
| |
|---|
| Median (12 companies) | 6.5% | 7.2% | 8.3% | 5.9% | 4.0% |
|---|
| Deccan Cements ($DECCANCE) | 0.5% | 3.2% | 0.5% | 1.2% | 1.4% |
Top companies by ROIC, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Saurashtra Cement ($SAURASHCEM) | 38.6% | 42.7% | 13.9% | 26.9% | - |
| Indian Hume Pipe Co ($INDIANHUME) | 7.6% | 13.8% | 15.0% | 18.0% | 14.5% |
| Orient Cement ($ORIENTCEM) | - | 57.3% | 15.2% | 15.4% | 4.6% |
| Acc ($ACC) | 20.2% | 12.7% | 11.0% | 9.9% | - |
| K.C.P ($KCP) | 17.6% | 6.7% | 7.1% | 9.3% | - |
| |
|---|
| Median (17 companies) | 13.7% | 11.2% | 6.7% | 8.1% | 4.6% |
|---|
| Deccan Cements ($DECCANCE) | 17.4% | 8.0% | 6.4% | 9.1% | 20.8% |
Top companies by Net Debt / EBITDA
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Udaipur Cement Works ($UDAICEMENT) | - | - | - | 17.1x | 358.6x |
| Heidelbergcement India ($HEIDELBERG) | 14.0x | 12.2x | 0.0x | 10.4x | - |
| Prism Cement ($PRISMCEM) | 4.8x | 6.0x | 10.0x | 6.0x | - |
| J.K.Cement ($JKCEMENT) | 2.3x | 2.3x | 6.9x | 5.8x | - |
| India Cements ($INDIACEM) | 3.2x | 3.5x | 5.5x | 4.6x | - |
| |
|---|
| Median (14 companies) | 2.1x | 2.4x | 2.6x | 2.7x | 3.3x |
|---|
| Deccan Cements ($DECCANCE) | 1.7x | 3.3x | 3.4x | 2.5x | 0.4x |
