Jai Corp Net Income surged on 25.9% and EBITDA Margin increased on 3.1 pp from 12.7% to 15.8%

25-05-2016 • About Jai Corp ($JAICORPLTD) • By InTwits

Jai Corp reported FY2016 financial results today. Overall the company's long term financial model is characterised by the following facts:

• Jai Corp has low CAPEX intensity: 5 year average CAPEX/Revenue was 2.9%. At the same time it's in pair with industry average of 6.8%
• CAPEX is quite volatile: ₹587m in FY2016, ₹853m in FY2015, ₹277m in FY2014, ₹195m in FY2013, ₹395m in FY2012
• The company has potentially unprofitable business model: ROIC is 3.8%

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 decreased on 4.9%. Having declining revenue the company managed to increase EBITDA margin. EBITDA Margin increased on 3.1 pp from 12.7% to 15.8% in FY2016.

Net Income margin increased on 2.4 pp from 7.4% to 9.8% in FY2016. Net Income margin followed a declining trend at -2.9 pp per annum in FY2012-FY2016.

Investments (CAPEX, working capital and M&A)

In FY2016 Jai Corp had CAPEX/Revenue of 2.4%. The company showed almost no change in CAPEX/Revenue from FY2013 to FY2016. It's average level of CAPEX/Revenue for the last three years was 2.6%.

Return on investment

The company operates at low ROIC (3.8%) and ROE (2.9%). ROIC increased slightly on 1.00 pp from 2.8% to 3.8% in FY2016. ROE increased slightly on 0.63 pp from 2.3% to 2.9% in FY2016. ROE followed a declining trend at -0.71 pp per annum in the last 5 years.

Leverage (Debt)

Debt level is 0.1x Net Debt / EBITDA and 0.2x Debt / EBITDA. Net Debt / EBITDA decreased slightly on 0.0060x from 0.1x to 0.1x in FY2016. Debt dropped on 10.0% while cash dropped on 24.1%. Net Debt/EBITDA followed a declining trend at -0.1x per annum in the last 5 years.

Jai Corp has no short term refinancing risk: cash is higher than short term debt (139.4%).

Management team

The company's CEO is Gaurav Jain. Gaurav Jain has 12 years tenure with the company. Jai Corp's CFO is Pramod Kumar Jaiswal. Pramod Kumar Jaiswal has 8 years tenure at the company.

Financial and operational results

Jai Corp ($JAICORPLTD) key annual financial indicators

mln. INR	2012	2013	2014	2015	2016	2016/2015
P&L
Revenue	6,825	6,954	7,480	7,060	6,712	-4.9%
EBITDA	966	1,132	1,194	896	1,059	18.2%
Net Income	1,374	1,066	997	525	661	25.9%
Balance Sheet
Cash	86	46	278	163	124	-24.1%
Short Term Debt	283	242	195	42	89	109.3%
Long Term Debt	211	206	218	224	151	-32.6%
Cash flow
Capex	271	183	182	216	161	-25.2%
Ratios
Revenue growth	25.4%	1.9%	7.6%	-5.6%	-4.9%
EBITDA growth	-3.5%	17.2%	5.5%	-25.0%	18.2%
EBITDA Margin	14.1%	16.3%	16.0%	12.7%	15.8%	3.1%
Net Income Margin	20.1%	15.3%	13.3%	7.4%	9.8%	2.4%
CAPEX, % of revenue	4.0%	2.6%	2.4%	3.1%	2.4%	-0.7%
ROIC	3.0%	4.0%	4.3%	2.8%	3.8%	1.0%
ROE	5.3%	4.6%	4.4%	2.3%	2.9%	0.6%
Net Debt/EBITDA	0.4x	0.4x	0.1x	0.1x	0.1x	-0.0x

Peers in Iron & Steel/Interm.Products

Below we provide Jai Corp 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 ($VASWANI)	51.4%	-2.1%	5.6%	12.6%	-
Median (32 companies)	13.3%	8.8%	2.8%	-0.4%	-16.9%
Jai Corp ($JAICORPLTD)	-	1.9%	7.6%	-5.6%	-4.9%

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 ($TATAMETALI)	-9.6%	0.9%	6.8%	14.6%	16.8%
Median (29 companies)	9.4%	9.0%	7.0%	7.3%	11.2%
Jai Corp ($JAICORPLTD)	14.1%	16.3%	16.0%	12.7%	15.8%

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 ($JSWSTEEL)	11.9%	14.7%	11.3%	12.7%	12.4%
Median (17 companies)	9.7%	11.6%	7.7%	5.3%	9.6%
Jai Corp ($JAICORPLTD)	4.0%	2.6%	2.4%	3.1%	2.4%

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 ($GALLANTT)	8.7%	11.7%	8.5%	11.7%	-
Median (40 companies)	7.2%	5.7%	6.0%	5.4%	4.8%
Jai Corp ($JAICORPLTD)	3.0%	4.0%	4.3%	2.8%	3.8%

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	-
Prakash Industries ($PRAKASH)	2.5x	2.8x	2.5x	11.9x	3.4x
Median (26 companies)	4.6x	4.4x	3.4x	2.2x	0.9x
Jai Corp ($JAICORPLTD)	0.4x	0.4x	0.1x	0.1x	0.1x

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