Emami Paper Mills Net Income surged on 129% and Revenue increased on 3.4%
24-05-2016 • About Emami Paper Mills (
$EMAMIPAP) • By InTwits
Emami Paper Mills reported FY2016 financial results today. Here are the key drivers of the company's long term financial model:
- EBITDA Margin is declining: 10.0% in FY2016 vs. 11.4% in FY2015 vs. 13.3% in FY2012
- Emami Paper Mills has high CAPEX intensity: 5 year average CAPEX/Revenue was 32.4%. At the same time it's a lot of higher than industry average of 17.6%.
- CAPEX is quite volatile: ₹1,169m in FY2016, ₹4,653m in FY2015, ₹1,046m in FY2014, ₹366m in FY2013, ₹1,210m in FY2012
- The company has potentially unprofitable business model: ROIC is 2.0%
- It operates with high leverage: Net Debt/EBITDA is 16.7x while industry average is 1.9x
Below you can find a comprehensive analysis of the key data driving the company's performance and the stock price.
Revenue and profitability
Emami Paper Mills's Revenue increased on 3.4%. Having declining revenue the company managed to increase EBITDA margin. EBITDA Margin increased on 3.4 pp from 2.5% to 6.0% in FY2016. During the last 5 years EBITDA Margin topped in FY2013 at 15.0% and was declining since that time.
Net Income margin increased on 2.8 pp from 2.3% to 5.2% in FY2016.
Investments (CAPEX, working capital and M&A)
In FY2016 the company had CAPEX/Revenue of 21.7%. CAPEX/Revenue surged on 14.4 pp from 7.3% in FY2013 to 21.7% in FY2016. For the last three years the average CAPEX/Revenue was 43.4%. Emami Paper Mills maintained rich investment policy and has spent a lot to CAPEX (218% of EBITDA).
Return on investment
The company operates at low ROIC (2.0%) and ROE (5.8%). ROIC decreased slightly on 1.0 pp from 3.0% to 2.0% in FY2016. ROE increased on 3.8 pp from 2.0% to 5.8% in FY2016. ROIC stuck to a declining trend at -1.1 pp per annum in FY2012-FY2016.
Leverage (Debt)
Company's Net Debt / EBITDA is 16.7x and Debt / EBITDA is 18.2x. Net Debt / EBITDA surged on 5.5x from 11.2x to 16.7x in FY2016. Debt jumped on 27.7% while cash dropped on 17.0%. During the last 5 years Net Debt/EBITDA bottomed in FY2014 at 5.0x and was growing since that time.
Emami Paper Mills has short term refinancing risk: cash is only 29.6% of short term debt.
Valuation and dividends
Emami Paper Mills's trades at EV/EBITDA 22.1x and P/E 10.3x while industy averages are 17.8x and 21.9x.
Financial and operational results
Emami Paper Mills ($EMAMIPAP) key annual financial indicators| mln. INR | 2012 | 2013 | 2014 | 2015 | 2016 | 2016/2015 |
|---|
P&L
|
|---|
| Revenue | 4,951 | 4,999 | 5,454 | 5,210 | 5,388 | 3.4% |
| EBITDA | 658 | 748 | 789 | 594 | 536 | -9.7% |
| Net Income | 83 | 116 | 186 | 122 | 279 | 129.5% |
Balance Sheet
|
|---|
| Cash | 216 | 734 | 1,630 | 959 | 795 | -17.0% |
| Short Term Debt | 2,182 | 2,107 | 1,844 | 1,098 | 2,691 | 145.1% |
| Long Term Debt | 2,917 | 2,613 | 3,712 | 6,544 | 7,071 | 8.1% |
Cash flow
|
|---|
| Capex | 1,210 | 366 | 1,046 | 4,653 | 1,169 | -74.9% |
Ratios
|
|---|
| Revenue growth | 15.2% | 1.0% | 9.1% | -4.5% | 3.4% | |
| EBITDA growth | 1.5% | 13.7% | 5.5% | -24.7% | -9.7% | |
|
|---|
| EBITDA Margin | 13.3% | 15.0% | 14.5% | 11.4% | 10.0% | -1.4% |
| Net Income Margin | 1.7% | 2.3% | 3.4% | 2.3% | 5.2% | 2.8% |
| CAPEX, % of revenue | 24.4% | 7.3% | 19.2% | 89.3% | 21.7% | -67.6% |
|
|---|
| ROIC | 5.8% | 5.9% | 5.4% | 3.0% | 2.0% | -1.0% |
| ROE | 4.9% | 5.6% | 5.8% | 2.0% | 5.8% | 3.8% |
| Net Debt/EBITDA | 7.4x | 5.3x | 5.0x | 11.2x | 16.7x | 5.5x |
Peers in Paper & Paper Products
Below we provide Emami Paper Mills benchmarking against other companies in Paper & Paper Products 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 |
|---|
| N.R.Agarwal Industries ($NRAGRINDQ) | 5.5% | 4.0% | 5.5% | 34.1% | - |
| South India Paper Mills ($STHINPA) | 2.2% | -1.1% | -14.7% | 29.2% | - |
| Pudumjee Pulp & Paper Mills ($PDUMJEPULP) | 2.1% | 8.4% | 4.9% | 26.5% | - |
| Tcpl Packaging ($TCPLPACK) | 17.8% | 33.7% | 5.8% | 26.1% | - |
| Jk Paper ($JKPAPER) | - | 9.4% | 18.5% | 24.3% | 13.5% |
| |
|---|
| Median (14 companies) | 9.1% | 6.6% | 7.5% | 5.0% | 9.7% |
|---|
| Emami Paper Mills ($EMAMIPAP) | - | 1.0% | 9.1% | -4.5% | 3.4% |
Top companies by EBITDA margin, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Tamil Nadu Newsprint & Papers ($TNPL) | 21.0% | 22.2% | 22.5% | 24.0% | - |
| Tcpl Packaging ($TCPLPACK) | 16.1% | 14.9% | 15.7% | 16.5% | - |
| South India Paper Mills ($STHINPA) | 13.5% | 16.1% | 10.2% | 15.8% | - |
| Yash Papers ($YASHPPR) | 15.7% | 16.8% | 16.0% | 15.7% | - |
| Kuantum Papers ($KUANTUM) | 11.2% | 14.2% | 15.9% | 12.7% | - |
| |
|---|
| Median (15 companies) | 11.6% | 11.8% | 13.5% | 9.8% | 13.1% |
|---|
| Emami Paper Mills ($EMAMIPAP) | 13.3% | 15.0% | 14.5% | 11.4% | 10.0% |
Top companies by CAPEX/Revenue, %
| Top | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Tamil Nadu Newsprint & Papers ($TNPL) | 18.9% | 10.4% | 5.5% | 35.2% | - |
| Tcpl Packaging ($TCPLPACK) | 18.3% | 8.6% | 11.1% | 12.1% | - |
| Jk Paper ($JKPAPER) | 47.6% | 59.5% | 15.9% | 4.2% | 1.6% |
| |
|---|
| Median (3 companies) | 11.3% | 10.4% | 11.1% | 12.1% | 1.6% |
|---|
| Emami Paper Mills ($EMAMIPAP) | 24.4% | 7.3% | 19.2% | 89.3% | 21.7% |
Top companies by ROIC, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Tcpl Packaging ($TCPLPACK) | 15.4% | 17.4% | 16.9% | 23.1% | - |
| Tamil Nadu Newsprint & Papers ($TNPL) | 5.3% | 8.2% | 11.1% | 12.7% | - |
| Jk Paper ($JKPAPER) | 5.2% | 2.7% | 1.1% | 4.3% | 10.5% |
| Rama Pulp & Papers ($RAMAPULP) | - | 10.8% | - | - | - |
| Ruchira Papers ($RUCHIRA) | 15.4% | 20.2% | - | - | - |
| |
|---|
| Median (21 companies) | 8.3% | 9.4% | 11.3% | 12.7% | 10.5% |
|---|
| Emami Paper Mills ($EMAMIPAP) | 5.8% | 5.9% | 5.4% | 3.0% | 2.0% |
Top companies by Net Debt / EBITDA
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Jk Paper ($JKPAPER) | 6.8x | 12.7x | 14.1x | 8.6x | 4.0x |
| Tamil Nadu Newsprint & Papers ($TNPL) | 5.4x | 3.6x | 2.8x | 4.0x | - |
| Tcpl Packaging ($TCPLPACK) | 2.6x | 2.3x | 2.2x | 1.9x | - |
| Yash Papers ($YASHPPR) | 5.2x | 5.5x | 4.5x | 0.0x | - |
| Sree Sakthi Paper Mills ($SREESAKHTI) | 2.1x | 1.7x | - | 0.0x | - |
| |
|---|
| Median (13 companies) | 3.2x | 2.7x | 0.0x | 0.0x | 0.0x |
|---|
| Emami Paper Mills ($EMAMIPAP) | 7.4x | 5.3x | 5.0x | 11.2x | 16.7x |
