Salzer Electronics reports 52.7% CAPEX growth in 2016 and 27.5% Revenue growth
26-05-2016 • About Salzer Electronics (
$SALZER) • By InTwits
Salzer Electronics reported FY2016 financial results today. Here are the key drivers of the company's long term financial model:
- Salzer Electronics is a growth stock: FY2016 revenue growth was 27.5%, 5 year revenue CAGR was 14.9% at FY2016 ROIC 13.8%
- EBITDA Margin is relatively stable: 12.1% in FY2016 vs. 12.6% in FY2015 vs. 12.9% in FY2012
- Salzer Electronics has medium CAPEX intensity: 5 year average CAPEX/Revenue was 6.9%. At the same time it's in pair with industry average of 8.6%
- CAPEX is quite volatile: ₹353m in FY2016, ₹231m in FY2015, ₹101m in FY2014, ₹128m in FY2013, ₹152m in FY2012
- The company has highly profitable business model: ROIC is 13.8%
Below you can find a comprehensive analysis of the key data driving the company's performance and the stock price.
Revenue and profitability
Salzer Electronics's Revenue jumped on 27.5%. During the last 5 years Revenue growth bottomed in FY2013 at 2.6% and was accelerating since that time. Revenue growth was financed by EBITDA margin decline. EBITDA Margin decreased slightly on 0.51 pp from 12.6% to 12.1% in FY2016.
Net Income margin showed almost no change in FY2016. During the last 5 years Net Income margin bottomed in FY2013 at 3.1% and was growing since that time.
Investments (CAPEX, working capital and M&A)
The company's CAPEX/Revenue was 9.8% in FY2016. The company's CAPEX/Revenue increased on 4.2 pp from 5.6% in FY2013 to 9.8% in FY2016. Average CAPEX/Revenue for the last three years was 7.4%. To deliver its fast growth the company invested a large share of EBITDA (81.1%) to CAPEX. During the last 5 years CAPEX as a % of Revenue bottomed in FY2014 at 4.1% and was growing since that time.
Return on investment
The company operates at good ROIC (13.8%) while ROE is low (11.2%). ROIC decreased slightly on 0.79 pp from 14.6% to 13.8% in FY2016. ROE showed almost no change in FY2016.
Leverage (Debt)
Debt level is 2.2x Net Debt / EBITDA and 2.3x Debt / EBITDA. Net Debt / EBITDA dropped on 0.5x from 2.7x to 2.2x in FY2016. Debt increased on 2.2% while cash surged on 198%. During FY2012-FY2016 Net Debt/EBITDA topped in FY2015 at 2.7x.
Salzer Electronics has short term refinancing risk: cash is only 6.2% of short term debt.
Valuation and dividends
Salzer Electronics's trades at EV/EBITDA 8.3x and P/E 15.7x while industy averages are 17.8x and 21.9x. The company's EV/(EBITDA-CAPEX) is 44.0x with the industry average at 22.8x.
Financial and operational results
Salzer Electronics ($SALZER) key annual financial indicators| mln. INR | 2012 | 2013 | 2014 | 2015 | 2016 | 2016/2015 |
|---|
P&L
|
|---|
| Revenue | 2,229 | 2,287 | 2,445 | 2,833 | 3,611 | 27.5% |
| EBITDA | 288 | 285 | 303 | 356 | 435 | 22.3% |
| Net Income | 82 | 71 | 84 | 120 | 170 | 42.3% |
Balance Sheet
|
|---|
| Cash | 42 | 82 | 26 | 17 | 51 | 197.8% |
| Short Term Debt | 545 | 699 | 780 | 793 | 813 | 2.6% |
| Long Term Debt | 46 | 25 | 47 | 176 | 177 | 0.6% |
Cash flow
|
|---|
| Capex | 152 | 128 | 101 | 231 | 353 | 52.7% |
Ratios
|
|---|
| Revenue growth | 23.4% | 2.6% | 6.9% | 15.9% | 27.5% | |
| EBITDA growth | 11.4% | -0.8% | 6.0% | 17.6% | 22.3% | |
|
|---|
| EBITDA Margin | 12.9% | 12.5% | 12.4% | 12.6% | 12.1% | -0.5% |
| Net Income Margin | 3.7% | 3.1% | 3.5% | 4.2% | 4.7% | 0.5% |
| CAPEX, % of revenue | 6.8% | 5.6% | 4.1% | 8.2% | 9.8% | 1.6% |
|
|---|
| ROIC | 14.6% | 12.7% | 13.0% | 14.6% | 13.8% | -0.8% |
| ROE | 10.1% | 8.1% | 9.0% | 11.7% | 11.2% | -0.5% |
| Net Debt/EBITDA | 1.9x | 2.2x | 2.6x | 2.7x | 2.2x | -0.5x |
Peers in Other Elect.Equip./ Prod.
Below we provide Salzer Electronics benchmarking against other companies in Other Elect.Equip./ Prod. 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 |
|---|
| Indosolar ($INDOSOLAR) | -85.0% | -34.7% | -71.0% | 1,797.0% | - |
| B.C. Power Controls ($BCP) | 129.0% | -2.2% | 2.2% | 115.3% | - |
| Ece Industries ($ECEIND) | - | -30.9% | -14.8% | 58.1% | -12.8% |
| Pitti Laminations ($PITTILAM) | - | -23.9% | -19.4% | 35.9% | -8.3% |
| Genus Power Infrastructures ($GENUSPOWER) | - | -7.5% | 17.4% | 19.5% | -6.3% |
| |
|---|
| Median (14 companies) | 29.8% | -2.6% | -9.3% | 5.3% | -6.3% |
|---|
| Salzer Electronics ($SALZER) | - | 2.6% | 6.9% | 15.9% | 27.5% |
Top companies by Gross margin, %
| Top | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Malvica Engineering ($MALVICAE) | 0.0% | 0.0% | 0.0% | 0.0% | 0.0% |
| |
|---|
| Median (1 company) | 0.0% | 0.0% | 0.0% | 0.0% | 0.0% |
|---|
Top companies by EBITDA margin, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Fluidomat ($FLUIDOM) | - | - | - | 28.0% | - |
| Indosolar ($INDOSOLAR) | -114.4% | -52.7% | -140.0% | 16.3% | - |
| Genus Power Infrastructures ($GENUSPOWER) | 14.1% | 11.0% | 13.8% | 13.8% | 14.8% |
| Pitti Laminations ($PITTILAM) | 15.6% | 13.6% | 13.2% | 12.0% | 6.2% |
| Birla Ericsson Optical ($BIRLAERIC) | 2.6% | 9.0% | 12.3% | 11.3% | 10.7% |
| |
|---|
| Median (16 companies) | 8.0% | 8.8% | 8.7% | 7.8% | 8.4% |
|---|
| Salzer Electronics ($SALZER) | 12.9% | 12.5% | 12.4% | 12.6% | 12.1% |
Top companies by CAPEX/Revenue, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Indosolar ($INDOSOLAR) | 311.2% | 148.3% | 42.3% | 26.9% | - |
| Diamond Power Infrastructure ($DIAPOWER) | - | 6.8% | 8.4% | 8.7% | - |
| Birla Ericsson Optical ($BIRLAERIC) | 1.3% | 4.4% | 4.0% | 3.5% | - |
| Kirloskar Electric Company ($KECL) | 1.8% | 0.7% | 1.8% | 2.3% | 0.3% |
| Genus Power Infrastructures ($GENUSPOWER) | 3.4% | 3.6% | 2.0% | 2.2% | 3.7% |
| |
|---|
| Median (6 companies) | 2.8% | 4.0% | 3.6% | 2.9% | 2.0% |
|---|
| Salzer Electronics ($SALZER) | 6.8% | 5.6% | 4.1% | 8.2% | 9.8% |
Top companies by ROIC, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Birla Ericsson Optical ($BIRLAERIC) | -2.2% | 8.2% | 27.3% | 16.6% | - |
| Genus Power Infrastructures ($GENUSPOWER) | 12.4% | 8.0% | 12.2% | 13.5% | 12.7% |
| Hbl Power Systems ($HBLPOWER) | 10.6% | 10.1% | 4.3% | 6.7% | - |
| Indosolar ($INDOSOLAR) | -14.0% | -6.8% | -5.2% | 2.2% | - |
| Malvica Engineering ($MALVICAE) | 0.0% | 0.0% | 0.0% | 0.0% | 0.0% |
| |
|---|
| Median (23 companies) | 8.9% | 8.1% | 7.0% | 2.2% | 0.0% |
|---|
| Salzer Electronics ($SALZER) | 14.6% | 12.7% | 13.0% | 14.6% | 13.8% |
Top companies by Net Debt / EBITDA
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Diamond Power Infrastructure ($DIAPOWER) | 3.3x | 5.2x | 4.8x | 46.8x | - |
| Indosolar ($INDOSOLAR) | - | - | - | 20.3x | - |
| Hbl Power Systems ($HBLPOWER) | 4.1x | 4.4x | 6.8x | 4.7x | - |
| Genus Power Infrastructures ($GENUSPOWER) | 3.2x | 3.9x | 2.9x | 2.7x | 1.5x |
| Birla Ericsson Optical ($BIRLAERIC) | 14.5x | 2.9x | 1.3x | 1.6x | 0.0x |
| |
|---|
| Median (13 companies) | 3.6x | 4.3x | 2.9x | 0.0x | 0.0x |
|---|
| Salzer Electronics ($SALZER) | 1.9x | 2.2x | 2.6x | 2.7x | 2.2x |
