Sah Petroleums reports 101% EBITDA growth in 2016 and 3.3 pp EBITDA Margin growth from 3.5% to 6.8%

23-05-2016 • About Sah Petroleums ($SAHPETRO) • By InTwits

Sah Petroleums reported FY2016 financial results today. Here are the key drivers of the company's long term financial model:

Sah Petroleums has low CAPEX intensity: 5 year average CAPEX/Revenue was 1.5%. At the same time it's a lot of higher than industry average of 1.6%.
CAPEX is quite volatile: ₹117m in FY2016, ₹158m in FY2015, ₹8m in FY2014, ₹9m in FY2013, ₹21m in FY2012
The company has business model with average profitability: ROIC is 11.8%

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 increased on 3.7%. During the last 5 years Revenue growth bottomed in FY2013 at -13.1% and was accelerating since that time. Revenue growth happened at the same time with EBITDA margin expansion. EBITDA Margin increased on 3.3 pp from 3.5% to 6.8% in FY2016.

Net Income margin increased slightly on 2.0 pp from 1.2% to 3.2% in FY2016. Net Income margin followed a growing trend at 0.79 pp per annum in FY2012-FY2016.

Investments (CAPEX, working capital and M&A)

In FY2016 the company had CAPEX/Revenue of 2.8%. Sah Petroleums's CAPEX/Revenue increased on 2.6 pp from 0.22% in FY2013 to 2.8% in FY2016. Average CAPEX/Revenue for the last three years was 2.3%.

Return on investment

The company operates at low ROIC (11.8%) and ROE (10.1%). ROIC increased on 4.2 pp from 7.5% to 11.8% in FY2016. ROE increased on 6.1 pp from 4.0% to 10.1% in FY2016. ROE stuck to a growing trend at 2.5 pp per annum in FY2012-FY2016.

Leverage (Debt)

Company's Net Debt / EBITDA is 3.5x and Debt / EBITDA is 4.1x. Net Debt / EBITDA surged on 1.6x from 1.9x to 3.5x in FY2016. Debt surged on 194% while cash surged on 35.5%. During FY2012-FY2016 Net Debt/EBITDA bottomed in FY2014 at -1.0x and was growing since that time.

Sah Petroleums has short term refinancing risk: cash is only 17.5% of short term debt.

Valuation and dividends

Sah Petroleums's trades at EV/EBITDA 14.9x and P/E 23.9x while industy averages are 17.8x and 21.9x. The company's EV/(EBITDA-CAPEX) is 25.3x with the industry average at 22.8x.

Financial and operational results

Sah Petroleums ($SAHPETRO) key annual financial indicators

mln. INR	2012	2013	2014	2015	2016	2016/2015
P&L
Revenue	4,801	4,174	4,036	4,073	4,225	3.7%
EBITDA	273	146	153	142	285	101.4%
Net Income	1	-13	10	50	136	170.5%
Balance Sheet
Cash	137	111	152	138	188	35.5%
Short Term Debt		0	1	292	1,070	266.8%
Long Term Debt	0	0	0	109	108	-1.3%
Cash flow
Capex	21	9	8	158	117	-25.6%
Ratios
Revenue growth	31.3%	-13.1%	-3.3%	0.9%	3.7%
EBITDA growth	38.8%	-46.7%	5.1%	-7.5%	101.4%

EBITDA Margin	5.7%	3.5%	3.8%	3.5%	6.8%	3.3%
Net Income Margin	0.0%	-0.3%	0.3%	1.2%	3.2%	2.0%
CAPEX, % of revenue	0.4%	0.2%	0.2%	3.9%	2.8%	-1.1%

ROIC	20.0%	10.0%	10.9%	7.5%	11.8%	4.2%
ROE	0.0%	-1.0%	0.9%	4.0%	10.1%	6.1%
Net Debt/EBITDA	-0.5x	-0.8x	-1.0x	1.9x	3.5x	1.6x

Peers in Oil Marketing & Distribution

Below you can find Sah Petroleums benchmarking vs. other companies in Oil Marketing & Distribution 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	FY2012	FY2013	FY2014	FY2015	FY2016
Eastern Gases ($EASTERNGAS)	51.5%	54.1%	8.5%	0.5%	-
Indian Oil Corporation ($IOC)	31.8%	13.1%	5.8%	-8.0%	-
Median (2 companies)	41.7%	33.6%	7.1%	-3.8%	-
Sah Petroleums ($SAHPETRO)	-	-13.1%	-3.3%	0.9%	3.7%

Top companies by EBITDA margin, %


Top	FY2012	FY2013	FY2014	FY2015	FY2016
Gulf Oil Corporation ($GULFOILCOR)	-	-	-	-	5.8%
Median (1 company)	4.4%	3.2%	4.3%	2.5%	5.8%
Sah Petroleums ($SAHPETRO)	5.7%	3.5%	3.8%	3.5%	6.8%

Top companies by CAPEX/Revenue, %


Top	FY2012	FY2013	FY2014	FY2015	FY2016
Gulf Oil Corporation ($GULFOILCOR)	-	-	-	-	1.8%
Median (1 company)	3.0%	2.8%	4.5%	2.9%	1.8%
Sah Petroleums ($SAHPETRO)	0.4%	0.2%	0.2%	3.9%	2.8%

Top companies by ROIC, %


Top	FY2012	FY2013	FY2014	FY2015	FY2016
Indian Oil Corporation ($IOC)	12.7%	6.4%	8.7%	3.9%	-
Eastern Gases ($EASTERNGAS)	15.4%	15.1%	-	-	-
Median (2 companies)	14.1%	10.8%	8.7%	3.9%	1.0%
Sah Petroleums ($SAHPETRO)	20.0%	10.0%	10.9%	7.5%	11.8%

Top companies by Net Debt / EBITDA


Top	FY2012	FY2013	FY2014	FY2015	FY2016
Gulf Oil Corporation ($GULFOILCOR)	-	-	-	-	43.4x
Median (1 company)	2.9x	4.3x	4.4x	5.6x	43.4x
Sah Petroleums ($SAHPETRO)	-0.5x	-0.8x	-1.0x	1.9x	3.5x

Sah Petroleums stock price chart

Sah Petroleums financials

mln.	FY2010	FY2011	FY2012

Revenue	4,841	3,656	4,801
EBITDA	-84.726	196.8	273.1
Net income	-61.215	158.1	0.587
CAPEX	68.198	39.729	21.093
Debt	953.4	0.000	0.000
Cash	119.9	133.9	137.2

About Sah Petroleums

Sah Petroleums Limited designs, manufactures, and markets industrial and automotive lubricants, and specialties and process oils in India and internationally. The company offers automotive lubricants, including automotive engine oils for engine, gears, and transmissions, as well as other parts of heavy/medium/light commercial vehicles, agricultural tractors, pump sets, outboard motors, marine engines, commercial and passenger cars, and two and three wheelers; automotive gear and transmission oils; and greases and specialties. It also provides industrial lubricants comprising industrial oils and greases, neat oils for metal working products, and industrial specialty oils primarily for the automobile, engineering, steel, cement, sugar, and machining industries. In addition, the company offers rubber process oils and secondary plasticizers; transformer oils; and white oils primarily for use as a mould releasing agent, insulant, defrothing agent, as well as to manufacture antistatic oils, petroleum jellies, and aggarbatties. Its products are used in various industries, including general engineering, rubber, tire, automotive, ball bearing, textile, plastic, paint, cement, sugar mill, cosmetic, adhesive, transformers, etc. The company markets its products under the IPOL brand name primarily through distributors and agents. Sah Petroleums Limited was incorporated in 1983 and is headquartered in Mumbai, India. As of July 31, 2014, Sah Petroleums Limited operates as a subsidiary of Gulf Petrochem PTE. Ltd.