Heritage Foods reports 60.0% EBITDA growth in 2016 and 1.6 pp EBITDA Margin growth from 4.0% to 5.5%
23-05-2016 • About Heritage Foods (
$HERITGFOOD) • By InTwits
Heritage Foods reported FY2016 financial results today. Here are the key drivers of the company's long term financial model:
- Heritage Foods is a fast growth stock: FY2016 revenue growth was 14.8%, 5 year revenue CAGR was 16.8% at FY2016 ROIC 26.3%
- Heritage Foods has low CAPEX intensity: 5 year average CAPEX/Revenue was 2.6%. At the same time it's in pair with industry average of 3.0%
- CAPEX is quite volatile: ₹684m in FY2016, ₹512m in FY2015, ₹642m in FY2014, ₹307m in FY2013, ₹293m in FY2012
- The company has highly profitable business model: ROIC is 26.3%
- It operates with high leverage: Net Debt/EBITDA is 0.5x while industry average is 0.4x
Below you can find a comprehensive analysis of the key data driving the company's performance and the stock price.
Revenue and profitability
Heritage Foods's Revenue surged on 14.8%. Revenue decline was accompanies by EBITDA margin decline. EBITDA Margin dropped on 18.8 pp from 8.3% to -10.5% in FY2016.
Net Income margin increased slightly on 0.96 pp from 1.4% to 2.3% in FY2016.
Investments (CAPEX, working capital and M&A)
In FY2016 the company had CAPEX/Revenue of 2.9%. CAPEX/Revenue increased slightly on 0.96 pp from 1.9% in FY2013 to 2.9% in FY2016. It's average CAPEX/Revenue for the last three years was 3.0%. To maintain its fast growth the company invested a large share of EBITDA (52.1%) to CAPEX.
Return on investment
The company operates at high and attractive ROIC (26.3%) and ROE (25.6%). ROIC jumped on 12.8 pp from 13.5% to 26.3% in FY2016. ROE jumped on 10.4 pp from 15.3% to 25.6% in FY2016.
Leverage (Debt)
Debt level is 0.5x Net Debt / EBITDA and 0.8x Debt / EBITDA. Net Debt / EBITDA dropped on 1.0x from 1.4x to 0.5x in FY2016. Debt dropped on 33.2% while cash jumped on 11.1%.
Heritage Foods has no short term refinancing risk: cash is higher than short term debt (113.4%).
Valuation and dividends
Heritage Foods's trades at EV/EBITDA 9.5x and P/E 21.5x while industy averages are 17.8x and 21.9x. The company's EV/(EBITDA-CAPEX) is 19.9x with the industry average at 22.8x.
Financial and operational results
Heritage Foods ($HERITGFOOD) key annual financial indicators| mln. INR | 2012 | 2013 | 2014 | 2015 | 2016 | 2016/2015 |
|---|
P&L
|
|---|
| Revenue | 13,934 | 16,018 | 17,220 | 20,730 | 23,806 | 14.8% |
| SG&A | | | | | 49 | |
| EBITDA | 513 | 1,024 | 956 | 820 | 1,313 | 60.0% |
| Net Income | 92 | 499 | 453 | 284 | 554 | 95.4% |
Balance Sheet
|
|---|
| Cash | 288 | 317 | 438 | 400 | 445 | 11.1% |
| Short Term Debt | 706 | 857 | 1,021 | 1,017 | 393 | -61.4% |
| Long Term Debt | 698 | 406 | 392 | 557 | 658 | 18.1% |
Cash flow
|
|---|
| Capex | 293 | 307 | 642 | 512 | 684 | 33.6% |
Ratios
|
|---|
| Revenue growth | 27.1% | 15.0% | 7.5% | 20.4% | 14.8% | |
| EBITDA growth | 42.5% | 99.7% | -6.7% | -14.2% | 60.0% | |
|
|---|
| EBITDA Margin | 3.7% | 6.4% | 5.6% | 4.0% | 5.5% | 1.6% |
| SG&A, % of revenue | | | | | 0.2% | |
| Net Income Margin | 0.7% | 3.1% | 2.6% | 1.4% | 2.3% | 1.0% |
| CAPEX, % of revenue | 2.1% | 1.9% | 3.7% | 2.5% | 2.9% | 0.4% |
|
|---|
| ROIC | 11.7% | 29.6% | 22.4% | 13.5% | 26.3% | 12.8% |
| ROE | 10.3% | 42.6% | 28.3% | 15.3% | 25.6% | 10.4% |
| Net Debt/EBITDA | 2.2x | 0.9x | 1.0x | 1.4x | 0.5x | -1.0x |
Peers in Packaged Foods
Below we provide Heritage Foods benchmarking against other companies in Packaged Foods 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 |
|---|
| Simran Farms ($SIMRAN) | 38.4% | 23.8% | 27.5% | 23.4% | - |
| Rcl Foods ($RCLFOODS) | -56.8% | -34.2% | 18.2% | 17.8% | - |
| Umang Dairies ($UMANGDAIR) | - | 15.7% | 24.5% | 16.1% | -24.8% |
| Britannia Industries ($BRITANNIA) | - | 12.4% | 11.3% | 13.8% | 10.7% |
| Kse ($KSE) | 19.5% | 28.6% | 15.7% | 11.6% | - |
| |
|---|
| Median (17 companies) | 10.8% | 15.1% | 15.8% | 4.5% | 1.6% |
|---|
| Heritage Foods ($HERITGFOOD) | - | 15.0% | 7.5% | 20.4% | 14.8% |
Top companies by EBITDA margin, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Zydus Wellness ($ZYDUSWELL) | 23.1% | 25.4% | 22.6% | 23.8% | 21.3% |
| Nestle India ($NESTLEIND) | 22.0% | 21.7% | 20.9% | 19.7% | - |
| Glaxosmithkline Consumer Healthcare ($GSKCONS) | 18.6% | 17.8% | 22.5% | 17.2% | 19.4% |
| Sampre Nutritions ($SAMPRE) | - | - | - | 16.8% | - |
| Krbl ($KRBL) | 14.1% | 14.2% | 15.1% | 15.4% | - |
| |
|---|
| Median (19 companies) | 9.2% | 10.2% | 9.0% | 7.8% | 16.8% |
|---|
| Heritage Foods ($HERITGFOOD) | 3.7% | 6.4% | 5.6% | 4.0% | 5.5% |
Top companies by CAPEX/Revenue, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Venky'S (India) ($VENKYS) | 8.9% | 6.6% | 10.4% | 7.7% | - |
| Krbl ($KRBL) | 4.1% | 4.0% | 6.1% | 7.3% | - |
| Umang Dairies ($UMANGDAIR) | 2.0% | 4.4% | 2.7% | 3.2% | - |
| Glaxosmithkline Consumer Healthcare ($GSKCONS) | 2.7% | - | 4.3% | 2.5% | 1.4% |
| Vadilal Industries ($VADILALIND) | 12.2% | 9.4% | 5.9% | 2.2% | - |
| |
|---|
| Median (9 companies) | 3.9% | 4.0% | 4.3% | 2.2% | 1.4% |
|---|
| Heritage Foods ($HERITGFOOD) | 2.1% | 1.9% | 3.7% | 2.5% | 2.9% |
Top companies by ROIC, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Kse ($KSE) | 27.7% | 14.1% | 36.9% | 69.0% | - |
| Britannia Industries ($BRITANNIA) | 24.6% | 33.7% | 54.0% | 59.4% | 66.7% |
| Nestle India ($NESTLEIND) | 57.7% | 47.9% | 49.6% | 40.2% | - |
| Glaxosmithkline Consumer Healthcare ($GSKCONS) | 44.6% | - | - | 36.2% | 35.7% |
| Umang Dairies ($UMANGDAIR) | 93.5% | 55.6% | 22.3% | 28.4% | - |
| |
|---|
| Median (21 companies) | 12.3% | 12.5% | 20.3% | 26.5% | 35.7% |
|---|
| Heritage Foods ($HERITGFOOD) | 11.7% | 29.6% | 22.4% | 13.5% | 26.3% |
Top companies by Net Debt / EBITDA
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Vadilal Industries ($VADILALIND) | 2.6x | 4.5x | 3.9x | 4.0x | - |
| Venky'S (India) ($VENKYS) | 2.6x | 2.8x | 6.7x | 3.9x | - |
| Bambino Agro Industries ($BAMBINO) | 3.2x | - | 3.2x | 2.9x | - |
| Krbl ($KRBL) | 4.1x | 2.9x | 3.0x | 2.7x | - |
| Umang Dairies ($UMANGDAIR) | 0.6x | 0.5x | 1.7x | 1.1x | - |
| |
|---|
| Median (17 companies) | 1.6x | 0.7x | 0.9x | 0.0x | -1.6x |
|---|
| Heritage Foods ($HERITGFOOD) | 2.2x | 0.9x | 1.0x | 1.4x | 0.5x |
