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Gujarat State Fertilizers & Chemicals revenue jumped on 15.8% while EBITDA Margin decreased slightly on 1.3 pp from 12.3% to 11.1%

24-05-2016 • About Gujarat State Fertilizers & Chemicals ($GSFC) • By InTwits

Gujarat State Fertilizers & Chemicals reported FY2016 financial results today. Here are the key drivers of the company's long term financial model:
  • Gujarat State Fertilizers & Chemicals has medium CAPEX intensity: 5 year average CAPEX/Revenue was 5.3%. At the same time it's a lot of higher than industry average of 3.9%.
  • CAPEX is quite volatile: ₹2,472m in FY2016, ₹1,391m in FY2015, ₹3,019m in FY2014, ₹4,150m in FY2013, ₹4,059m in FY2012
  • The company has business model with low profitability: ROIC is 9.7%
  • It operates with high leverage: Net Debt/EBITDA is 1.8x while industry average is 1.5x
Below you can find a comprehensive analysis of the key data driving the company's performance and the stock price.

Revenue and profitability


Gujarat State Fertilizers & Chemicals's Revenue surged on 15.8%. Revenue growth was financed by EBITDA margin decline. EBITDA Margin decreased slightly on 1.3 pp from 12.3% to 11.1% in FY2016.

Net Income margin decreased slightly on 1.4 pp from 7.7% to 6.3% in FY2016.

Investments (CAPEX, working capital and M&A)


In FY2016 Gujarat State Fertilizers & Chemicals had CAPEX/Revenue of 4.0%. Gujarat State Fertilizers & Chemicals's CAPEX/Revenue decreased on 2.6 pp from 6.6% in FY2013 to 4.0% in FY2016. For the last three years the average CAPEX/Revenue was 4.1%. CAPEX as a % of Revenue declined at -1.1 pp per annum in the last 5 years.

Return on investment


The company operates at low ROIC (9.7%) and ROE (8.3%). ROIC decreased slightly on 0.52 pp from 10.2% to 9.7% in FY2016. ROE decreased slightly on 1.1 pp from 9.4% to 8.3% in FY2016.

Leverage (Debt)


Debt level is 1.8x Net Debt / EBITDA and 1.9x Debt / EBITDA. Net Debt / EBITDA jumped on 1.2x from 0.6x to 1.8x in FY2016. Debt jumped on 73.0% while cash dropped on 89.4%.

Gujarat State Fertilizers & Chemicals has short term refinancing risk: cash is only 3.2% of short term debt.

Valuation and dividends


The company's trades at EV/EBITDA 6.5x and P/E 8.2x while industy averages are 17.8x and 21.9x. The company's EV/(EBITDA-CAPEX) is 10.2x with the industry average at 22.8x.

Financial and operational results


Gujarat State Fertilizers & Chemicals ($GSFC) key annual financial indicators

mln. INR201220132014201520162016/2015
P&L
Revenue53,01862,53354,12553,24661,63315.8%
EBITDA11,8798,4966,5496,5666,8153.8%
Net Income7,5765,1813,4224,0953,874-5.4%
Balance Sheet
Cash8,9531,6053,8333,548375-89.4%
Short Term Debt6,17012,6585,6465,52411,815113.9%
Long Term Debt02,3932,2441,9191,061-44.7%
Cash flow
Capex4,0594,1503,0191,3912,47277.7%
Ratios
Revenue growth11.5%17.9%-13.4%-1.6%15.8%
EBITDA growth-1.5%-28.5%-22.9%0.3%3.8%
EBITDA Margin22.4%13.6%12.1%12.3%11.1%-1.3%
Net Income Margin14.3%8.3%6.3%7.7%6.3%-1.4%
CAPEX, % of revenue7.7%6.6%5.6%2.6%4.0%1.4%
ROIC27.1%14.2%9.2%10.2%9.7%-0.5%
ROE23.9%13.9%8.4%9.4%8.3%-1.1%
Net Debt/EBITDA-0.2x1.6x0.6x0.6x1.8x1.2x

Peers in Fertilizers


Below you can find Gujarat State Fertilizers & Chemicals benchmarking vs. other companies in Fertilizers 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
Coromandel International ($COROMANDEL)--38.7%18.8%13.4%0.9%
Chambal Fertilisers & Chemicals ($CHAMBLFERT)-8.8%8.6%9.3%8.1%
Basant Agro Tech (India) ($BASANTGL)63.9%5.3%7.7%-2.4%-
Khaitan Chemicals & Fertilizers ($KHAICHEM)41.2%-29.1%-14.7%-15.2%-
Rama Phosphates ($RAMAPHO)-11.4%-13.9%-25.0%-2.5%
 
Median (5 companies)52.5%5.3%7.7%-2.4%0.9%
Gujarat State Fertilizers & Chemicals ($GSFC)-17.9%-13.4%-1.6%15.8%


Top companies by EBITDA margin, %

Top 5 FY2012 FY2013 FY2014 FY2015 FY2016
Coromandel International ($COROMANDEL)10.8%16.3%14.0%12.8%8.7%
Khaitan Chemicals & Fertilizers ($KHAICHEM)11.0%6.8%9.2%10.5%-
Basant Agro Tech (India) ($BASANTGL)8.7%9.4%8.6%9.1%-
Chambal Fertilisers & Chemicals ($CHAMBLFERT)13.2%10.7%10.6%8.2%8.3%
Rama Phosphates ($RAMAPHO)11.2%7.7%0.2%0.1%6.7%
 
Median (5 companies)11.0%9.4%9.2%9.1%8.3%
Gujarat State Fertilizers & Chemicals ($GSFC)22.4%13.6%12.1%12.3%11.1%


Top companies by CAPEX/Revenue, %

Top  FY2012 FY2013 FY2014 FY2015 FY2016
Chambal Fertilisers & Chemicals ($CHAMBLFERT)1.6%1.2%1.7%2.0%6.4%
Coromandel International ($COROMANDEL)-4.4%1.6%1.2%1.3%
 
Median (2 companies)1.7%4.3%1.6%1.6%3.9%
Gujarat State Fertilizers & Chemicals ($GSFC)7.7%6.6%5.6%2.6%4.0%


Top companies by ROIC, %

Top 5 FY2012 FY2013 FY2014 FY2015 FY2016
Coromandel International ($COROMANDEL)22.2%16.7%18.3%20.5%12.5%
Chambal Fertilisers & Chemicals ($CHAMBLFERT)13.6%9.3%9.2%8.6%9.4%
Kothari Industrial Corporation ($KOTIC)--5.5%---
Teesta Agro Industries ($TEEAI)-----
Rama Phosphates ($RAMAPHO)40.0%23.5%---
 
Median (7 companies)20.1%11.1%9.2%14.5%11.0%
Gujarat State Fertilizers & Chemicals ($GSFC)27.1%14.2%9.2%10.2%9.7%


Top companies by Net Debt / EBITDA

Top  FY2012 FY2013 FY2014 FY2015 FY2016
Chambal Fertilisers & Chemicals ($CHAMBLFERT)3.3x5.4x4.5x4.5x5.4x
Coromandel International ($COROMANDEL)1.8x2.8x1.4x2.0x2.9x
Teesta Agro Industries ($TEEAI)0.0x---0.0x
Rama Phosphates ($RAMAPHO)0.8x1.2x0.0x0.0x0.0x
 
Median (4 companies)2.4x3.8x1.4x0.0x1.5x
Gujarat State Fertilizers & Chemicals ($GSFC)-0.2x1.6x0.6x0.6x1.8x


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