Prakash Industries EBITDA jumped on 203% while Revenue dropped on 27.5%
24-05-2016 • About Prakash Industries (
$PRAKASH) • By InTwits
Prakash Industries reported FY2016 financial results today. Here are the key drivers of the company's long term financial model:
- EBITDA Margin is quite volatile: 9.2% in FY2016, 2.2% in FY2015, 14.5% in FY2014, 13.0% in FY2013, 17.8% in FY2012
- Prakash Industries has high CAPEX intensity: 5 year average CAPEX/Revenue was 10.3%. At the same time it's a lot of higher than industry average of 8.3%.
- CAPEX is quite volatile: ₹1,620m in FY2016, ₹1,806m in FY2015, ₹2,147m in FY2014, ₹1,596m in FY2013, ₹4,734m in FY2012
- The company has potentially unprofitable business model: ROIC is 2.9%
Below you can find a comprehensive analysis of the key data driving the company's performance and the stock price.
Revenue and profitability
Prakash Industries's Revenue dropped on 27.5%. Revenue decline was accelerating on average at -11.8 pp per annum in the last 5 years. Revenue decline happened at the same time with EBITDA margin expansion. EBITDA Margin increased on 7.0 pp from 2.2% to 9.2% in FY2016.
Net Income margin increased slightly on 0.67 pp from 0.33% to 1.0% in FY2016. Net Income margin followed a declining trend at -3.0 pp per annum in the last 5 years.
Investments (CAPEX, working capital and M&A)
In FY2016 Prakash Industries had CAPEX/Revenue of 7.9%. CAPEX/Revenue increased slightly on 1.5 pp from 6.4% in FY2013 to 7.9% in FY2016. For the last three years the average CAPEX/Revenue was 7.5%. The company invested a big chunk of EBITDA (86.0%) to CAPEX which didn't stop revenue from falling.
Return on investment
The company operates at low ROIC (2.9%) and ROE (0.9%). ROIC increased on 4.0 pp from -1.1% to 2.9% in FY2016. ROE increased slightly on 0.51 pp from 0.42% to 0.93% in FY2016. ROE declined at -3.5 pp per annum in the last 5 years.
Leverage (Debt)
Company's Net Debt / EBITDA is 3.4x and Debt / EBITDA is 3.5x. Net Debt / EBITDA dropped on 8.5x from 11.9x to 3.4x in FY2016. Debt dropped on 13.8% while cash dropped on 52.8%.
Prakash Industries has short term refinancing risk: cash is only 11.4% of short term debt.
Valuation and dividends
The company's trades at EV/EBITDA 6.0x and P/E 23.6x while industy averages are 17.8x and 21.9x. Prakash Industries's EV/(EBITDA-CAPEX) is 42.9x with the industry average at 22.8x.
Management team
The company's CEO is M L Pareek. M L Pareek has 5 years tenure with the company. P L Gupta is a the company's CFO. P L Gupta has spent 5 years at the company.
Financial and operational results
Prakash Industries ($PRAKASH) key annual financial indicators| mln. INR | 2012 | 2013 | 2014 | 2015 | 2016 | 2016/2015 |
|---|
P&L
|
|---|
| Revenue | 21,069 | 25,109 | 25,966 | 28,364 | 20,553 | -27.5% |
| EBITDA | 3,753 | 3,262 | 3,757 | 621 | 1,884 | 203.5% |
| Net Income | 2,682 | 1,649 | 1,732 | 93 | 206 | 120.3% |
Balance Sheet
|
|---|
| Cash | 392 | 67 | 96 | 197 | 93 | -52.8% |
| Short Term Debt | 1,067 | 1,442 | 2,629 | 1,301 | 811 | -37.7% |
| Long Term Debt | 8,622 | 7,885 | 7,023 | 6,303 | 5,747 | -8.8% |
Cash flow
|
|---|
| Capex | 4,734 | 1,596 | 2,147 | 1,806 | 1,620 | -10.3% |
Ratios
|
|---|
| Revenue growth | 26.6% | 19.2% | 3.4% | 9.2% | -27.5% | |
| EBITDA growth | 8.9% | -13.1% | 15.2% | -83.5% | 203.5% | |
|
|---|
| EBITDA Margin | 17.8% | 13.0% | 14.5% | 2.2% | 9.2% | 7.0% |
| Net Income Margin | 12.7% | 6.6% | 6.7% | 0.3% | 1.0% | 0.7% |
| CAPEX, % of revenue | 22.5% | 6.4% | 8.3% | 6.4% | 7.9% | 1.5% |
|
|---|
| ROIC | 10.7% | 7.2% | 8.0% | -1.1% | 2.9% | 4.0% |
| ROE | 14.6% | 8.1% | 8.0% | 0.4% | 0.9% | 0.5% |
| Net Debt/EBITDA | 2.5x | 2.8x | 2.5x | 11.9x | 3.4x | -8.5x |
Peers in Iron & Steel/Interm.Products
Below we provide Prakash Industries benchmarking against other companies in Iron & Steel/Interm.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 |
|---|
| Uttam Galva Steels ($UTTAMSTL) | 12.0% | 11.0% | -13.2% | 55.0% | - |
| Modern Steels ($MDRNSTL) | -2.6% | -22.7% | 0.7% | 20.3% | - |
| Maithan Alloys ($MAITHANALL) | - | 59.1% | 1.1% | 15.0% | 4.0% |
| Pennar Industries ($PENIND) | - | -8.5% | 0.5% | 12.7% | 3.4% |
| Vaswani Industries ($VASWANI) | 51.4% | -2.1% | 5.6% | 12.6% | - |
| |
|---|
| Median (32 companies) | 14.6% | 3.2% | 2.8% | -1.6% | -15.4% |
|---|
| Prakash Industries ($PRAKASH) | - | 19.2% | 3.4% | 9.2% | -27.5% |
Top companies by EBITDA margin, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Jindal Steel & Power ($JINDALSTEL) | 37.5% | 30.5% | 28.1% | 29.8% | 17.2% |
| Sarda Energy & Minerals ($SARDAEN) | 16.3% | 21.5% | 21.3% | 21.5% | - |
| Bhushan Steel ($BHUSANSTL) | 31.2% | 32.3% | 28.1% | 20.4% | - |
| Jsw Steel ($JSWSTEEL) | 17.8% | 17.1% | 17.9% | 17.7% | 14.6% |
| Tata Metaliks ($TATAMETALI) | -9.6% | 0.9% | 6.8% | 14.6% | 16.8% |
| |
|---|
| Median (29 companies) | 9.4% | 9.0% | 7.0% | 7.4% | 13.6% |
|---|
| Prakash Industries ($PRAKASH) | 17.8% | 13.0% | 14.5% | 2.2% | 9.2% |
Top companies by CAPEX/Revenue, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Jindal Steel & Power ($JINDALSTEL) | 34.2% | 47.6% | 69.6% | 26.4% | 21.8% |
| Jayaswal Neco Industries ($JAYNECOIND) | 20.4% | 44.0% | 31.1% | 17.3% | - |
| Steel Authority Of India ($SAIL) | 20.9% | 20.7% | 19.3% | 16.9% | 17.3% |
| Bhushan Steel ($BHUSANSTL) | 47.2% | 44.0% | 50.4% | 16.2% | - |
| Jsw Steel ($JSWSTEEL) | 11.9% | 14.7% | 11.3% | 12.7% | 12.4% |
| |
|---|
| Median (17 companies) | 7.5% | 11.6% | 6.6% | 4.4% | 11.0% |
|---|
| Prakash Industries ($PRAKASH) | 22.5% | 6.4% | 8.3% | 6.4% | 7.9% |
Top companies by ROIC, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Tata Metaliks ($TATAMETALI) | -23.5% | -3.7% | 19.9% | 57.4% | 42.6% |
| Pennar Industries ($PENIND) | 26.8% | 18.4% | 12.3% | 15.7% | 16.6% |
| Maithan Alloys ($MAITHANALL) | 16.3% | 15.1% | 5.5% | 15.3% | 19.0% |
| Kirloskar Ferrous Industries ($KIRLFER) | 19.1% | 16.8% | 12.4% | 14.7% | 15.9% |
| Gallantt Metal ($GALLANTT) | 8.7% | 11.7% | 8.5% | 11.7% | - |
| |
|---|
| Median (40 companies) | 6.8% | 5.5% | 5.5% | 5.4% | 10.4% |
|---|
| Prakash Industries ($PRAKASH) | 10.7% | 7.2% | 8.0% | -1.1% | 2.9% |
Top companies by Net Debt / EBITDA
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Visa Steel ($VISASTEEL) | 20.1x | - | 24.4x | 187.1x | - |
| Ismt ($ISMTLTD) | 5.3x | 9.8x | 19.9x | 48.3x | - |
| Kic Metaliks ($KAJARIR) | 9.2x | 3.0x | 18.2x | 19.8x | - |
| Bhushan Steel ($BHUSANSTL) | 6.3x | 8.6x | 12.9x | 17.7x | - |
| Jayaswal Neco Industries ($JAYNECOIND) | 4.7x | 7.2x | 8.6x | 11.2x | - |
| |
|---|
| Median (26 companies) | 4.6x | 4.4x | 3.4x | 1.7x | 0.9x |
|---|
| Prakash Industries ($PRAKASH) | 2.5x | 2.8x | 2.5x | 11.9x | 3.4x |
