Deep Industries's growth is outstanding: revenue grew 37.4% and EBITDA 39.2% annually over the last three years

26-05-2016 • About Deep Industries ($DEEPIND) • By InTwits

Deep Industries is a fast-growing stock in Integrated Oil & Gas industry. It showed noticeble revenue performance in the last years among with attractive profitability and financial model.

Growth story

Deep Industries showed growth in the last financial year. The company's revenue surged on 67.0% in FY2016. The growth also happened in EBITDA of 76.9% for the same period.

If we look for the longer period Deep Industries showed fast revenue growth of 37.4% from FY2013 to FY2016 annually. EBITDA surged on 39.2% from FY2013 to FY2016 annually.

Deep Industries ($DEEPIND) financials for the last 5 years

mln. INR	FY2012	FY2013	FY2014	FY2015	FY2016
Revenue	605	653	908	1,013	1,691
Revenue growth, %		8.0%	39.1%	11.5%	67.0%
SG&A, %
EBITDA	288	362	525	552	976
EBITDA growth, %		25.8%	45.0%	5.1%	76.9%
EBITDA margin, %	47.6%	55.5%	57.8%	54.5%	57.7%
Net Income	120	122	200	212	410
Net Income margin, %	19.8%	18.6%	22.0%	21.0%	24.2%
CAPEX	991	181	600	365	2,017
CAPEX/Revenue, %	164%	27.8%	66.1%	36.1%	119%
Debt	1,014	875	1,122	1,141	2,646
Cash	3	2	0	7	37
Net Debt/EBITDA	3.5x	2.4x	2.1x	2.1x	2.7x
ROIC, %	9.6%	9.5%	13.1%	12.3%	16.5%
ROE, %	8.6%	7.5%	10.9%	10.3%	17.2%

Profitability and return on investment

EBITDA growth was partly attributed to margin expansion. Deep Industries's EBITDA margin increased on 3.20 pp from 54.5% to 57.7% in FY2016. In the longer period Deep Industries's EBITDA margin increased slightly on 2.20 pp from 55.5% in FY2013 to 57.7% in FY2016.

Deep Industries shows attractive ROIC at 16.5% for the last 12 months which assumes stable development model. During the last three years it surged - it was 9.50% in FY2013. For the last three years the average ROIC was 14.0%.

The company showed fast Net Income margin growth of 3.20 pp from 21% to 24.2% in FY2016. In the longer period the company's Net Income margin surged on 5.60 pp from 18.6% in FY2013 to 24.2% in FY2016.

Deep Industries operates at ROE of 17.2%. It's average ROE for the last three years was 12.8%.

Capital expenditures (CAPEX)

To this fast growth the company had to invest in CAPEX.In FY2016 the company had CAPEX/Revenue of 119%. The company's CAPEX/Revenue surged on 91.5 pp from 27.8% in FY2013 to 119% in FY2016. For the last three years the average CAPEX/Revenue was 73.8%.

Leverage (Debt)

Having such a fast growth profile the company keeps medium debt level at 2.7x Net Debt/EBITDA. In the longer period the company's leverage surged on 0.26x from 2.41x in FY2013 to 2.67x in FY2016.

Peers in Integrated Oil & Gas

Below you can find Deep Industries benchmarking vs. other companies in Integrated Oil & Gas 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, %

	FY2012	FY2013	FY2014	FY2015	FY2016
Top
Reliance Industries ($RELIANCE)		10.8%	9.4%	-13.6%	-26.3%
Essar Oil ($ESSAROIL)	24.0%	51.8%	11.3%	-15.8%
Median (2 companies)	24.0%	31.3%	10.4%	-14.7%	-26.3%
Deep Industries ($DEEPIND)		8.0%	39.1%	11.5%	67.0%

Top companies by EBITDA margin, %

	FY2012	FY2013	FY2014	FY2015	FY2016
Top
Reliance Industries ($RELIANCE)	9.7%	8.3%	8.1%	10.0%	15.8%
Essar Oil ($ESSAROIL)	4.0%	4.2%	5.1%	5.7%
Median (2 companies)	6.8%	6.2%	6.6%	7.9%	15.8%
Deep Industries ($DEEPIND)	47.6%	55.5%	57.8%	54.5%	57.7%

Top companies by CAPEX/Revenue, %

	FY2012	FY2013	FY2014	FY2015	FY2016
Top
Reliance Industries ($RELIANCE)	4.6%	7.7%	13.8%	16.9%	18.0%
Essar Oil ($ESSAROIL)	4.8%	2.5%	1.4%	0.9%
Median (2 companies)	4.7%	5.1%	7.6%	8.9%	18.0%
Deep Industries ($DEEPIND)	164.0%	27.8%	66.1%	36.1%	119.3%

Top companies by ROIC, %

	FY2012	FY2013	FY2014	FY2015	FY2016
Top
Essar Oil ($ESSAROIL)	7.8%	9.9%	14.6%	14.2%
Reliance Industries ($RELIANCE)	8.5%	7.6%	7.3%	7.0%	7.3%
Median (2 companies)	8.2%	8.7%	11.0%	10.6%	7.3%
Deep Industries ($DEEPIND)	9.6%	9.5%	13.1%	12.3%	16.5%

Top companies by Net Debt / EBITDA

	FY2012	FY2013	FY2014	FY2015	FY2016
Top
Essar Oil ($ESSAROIL)	7.4x	6.6x	3.9x	5.7x
Reliance Industries ($RELIANCE)	1.7x	2.1x	2.9x	3.9x	3.9x
Median (2 companies)	4.5x	4.4x	3.4x	4.8x	3.9x
Deep Industries ($DEEPIND)	3.5x	2.4x	2.1x	2.1x	2.7x

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