Sterlite Technologies reports 5,822% Net Income growth in 2016 while 30.2% Revenue decline
26-05-2016 • About Sterlite Technologies (
$STRTECH) • By InTwits
Sterlite Technologies reported FY2016 financial results today. Overall the company's long term financial model is characterised by the following facts:
- EBITDA Margin is expanding: 20.9% in FY2016 vs. 15.0% in FY2015 vs. 7.5% in FY2012
- EBITDA Margin is quite volatile: 20.9% in FY2016, 15.0% in FY2015, 10.8% in FY2014, 7.5% in FY2013, 7.5% in FY2012
- Sterlite Technologies has high CAPEX intensity: 5 year average CAPEX/Revenue was 36.9%. At the same time it's a lot of higher than industry average of 3.5%.
- CAPEX is quite volatile: ₹2,226m in FY2016, ₹11,592m in FY2015, ₹16,636m in FY2014, ₹14,589m in FY2013, ₹6,534m in FY2012
- The company has business model with low profitability: ROIC is 7.4%
Below you can find a comprehensive analysis of the key data driving the company's performance and the stock price.
Revenue and profitability
Sterlite Technologies's Revenue dropped on 30.2%. Having declining revenue the company managed to increase EBITDA margin. EBITDA Margin increased on 6.0 pp from 15.0% to 20.9% in FY2016. EBITDA Margin stuck to a growing trend at 3.4 pp per annum in FY2012-FY2016.
Net Income margin increased on 7.1 pp from -0.085% to 7.0% in FY2016. During the last 5 years Net Income margin bottomed in FY2014 at -1.4% and was growing since that time.
Investments (CAPEX, working capital and M&A)
In FY2016 Sterlite Technologies had CAPEX/Revenue of 10.3%. The company's CAPEX/Revenue dropped on 36.9 pp from 47.2% in FY2013 to 10.3% in FY2016. It's average CAPEX/Revenue for the last three years was 37.5%. During FY2012-FY2016 CAPEX as a % of Revenue topped in FY2014 at 64.9% and was declining since that time.
Return on investment
The company operates at good ROE (13.8%) while ROIC is low (7.4%). ROIC increased on 2.9 pp from 4.5% to 7.4% in FY2016. ROE surged on 14.0 pp from -0.20% to 13.8% in FY2016. During the last 5 years ROIC bottomed in FY2014 at 3.0% and was growing since that time. During FY2012-FY2016 ROE bottomed in FY2014 at -3.1% and was growing since that time.
Leverage (Debt)
Company's Net Debt / EBITDA is 2.2x and Debt / EBITDA is 2.4x. Net Debt / EBITDA dropped on 8.9x from 11.1x to 2.2x in FY2016. Debt dropped on 79.5% while cash dropped on 53.4%. During the last 5 years Net Debt/EBITDA topped in FY2014 at 15.4x and was declining since that time.
Sterlite Technologies has short term refinancing risk: cash is only 11.6% of short term debt.
Valuation and dividends
Sterlite Technologies's trades at EV/EBITDA 8.5x and P/E 18.6x while industy averages are 17.8x and 21.9x. Sterlite Technologies's EV/(EBITDA-CAPEX) is 16.7x with the industry average at 22.8x.
Financial and operational results
Sterlite Technologies ($STRTECH) key annual financial indicators| mln. INR | 2012 | 2013 | 2014 | 2015 | 2016 | 2016/2015 |
|---|
P&L
|
|---|
| Revenue | 26,218 | 30,923 | 25,639 | 30,971 | 21,608 | -30.2% |
| SG&A | | | | | 283 | |
| EBITDA | 1,963 | 2,309 | 2,767 | 4,633 | 4,524 | -2.4% |
| Net Income | 396 | 252 | -355 | -26 | 1,511 | |
Balance Sheet
|
|---|
| Cash | 1,348 | 4,675 | 830 | 1,538 | 717 | -53.4% |
| Short Term Debt | 6,645 | 9,092 | 8,527 | 8,804 | 6,204 | -29.5% |
| Long Term Debt | 3,720 | 19,116 | 34,856 | 44,359 | 4,686 | -89.4% |
Cash flow
|
|---|
| Capex | 6,534 | 14,589 | 16,636 | 11,592 | 2,226 | -80.8% |
Ratios
|
|---|
| Revenue growth | 15.9% | 17.9% | -17.1% | 20.8% | -30.2% | |
| EBITDA growth | -26.7% | 17.6% | 19.9% | 67.4% | -2.4% | |
|
|---|
| EBITDA Margin | 7.5% | 7.5% | 10.8% | 15.0% | 20.9% | 6.0% |
| SG&A, % of revenue | | | | | 1.3% | |
| Net Income Margin | 1.5% | 0.8% | -1.4% | -0.1% | 7.0% | 7.1% |
| CAPEX, % of revenue | 24.9% | 47.2% | 64.9% | 37.4% | 10.3% | -27.1% |
|
|---|
| ROIC | 6.0% | 4.3% | 3.0% | 4.5% | 7.4% | 2.9% |
| ROE | 3.6% | 2.2% | -3.1% | -0.2% | 13.8% | 14.0% |
| Net Debt/EBITDA | 4.6x | 10.2x | 15.4x | 11.1x | 2.2x | -8.9x |
Peers in Heavy Electrical Equipment
Below you can find Sterlite Technologies benchmarking vs. other companies in Heavy Electrical Equipment 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 |
|---|
| Swelect Energy Systems ($SWELECTES) | 17.5% | -70.6% | -0.0% | 25.7% | - |
| T D Power Systems ($TDPOWERSYS) | - | -43.1% | -18.2% | 24.4% | -15.9% |
| Voltamp Transformers ($VOLTAMP) | 4.3% | -7.7% | -13.7% | 16.2% | - |
| Techno Electric And Engineering Co. ($TECHNO) | 13.6% | -15.7% | 1.7% | 12.6% | - |
| Techno Electric & Engineering Company ($TECHELE) | 13.6% | -15.7% | 1.7% | 12.6% | - |
| |
|---|
| Median (16 companies) | 13.6% | -8.7% | 1.7% | 1.1% | -3.5% |
|---|
| Sterlite Technologies ($STRTECH) | - | 17.9% | -17.1% | 20.8% | -30.2% |
Top companies by Gross margin, %
| Top | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Suzlon Energy ($SUZLON) | 33.2% | 27.2% | 28.6% | 31.3% | 40.6% |
| |
|---|
| Median (1 company) | 33.2% | 27.2% | 28.6% | 31.3% | 40.6% |
|---|
Top companies by EBITDA margin, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Ujaas Energy ($UJAAS) | 1.2% | 18.7% | 17.4% | 38.1% | 22.6% |
| Techno Electric And Engineering Co. ($TECHNO) | 27.0% | 34.5% | 28.5% | 26.5% | - |
| Techno Electric & Engineering Company ($TECHELE) | 27.0% | 34.5% | 28.5% | 26.5% | - |
| Emco ($EMCO) | 7.4% | 9.5% | 11.3% | 9.3% | - |
| Crompton Greaves ($CROMPGREAV) | 7.1% | 3.2% | 6.2% | 8.8% | 7.7% |
| |
|---|
| Median (16 companies) | 9.2% | 8.8% | 6.4% | 5.5% | 5.9% |
|---|
| Sterlite Technologies ($STRTECH) | 7.5% | 7.5% | 10.8% | 15.0% | 20.9% |
Top companies by CAPEX/Revenue, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Swelect Energy Systems ($SWELECTES) | 5.1% | 42.5% | 50.8% | 21.8% | - |
| Transformers And Rectifiers (India) ($TRIL) | 5.7% | 8.4% | 2.8% | 5.8% | 1.4% |
| T D Power Systems ($TDPOWERSYS) | 3.7% | 14.5% | 15.1% | 3.8% | 3.4% |
| Suzlon Energy ($SUZLON) | 4.2% | 3.7% | 3.4% | 3.7% | 4.3% |
| Crompton Greaves ($CROMPGREAV) | 3.3% | 1.8% | 2.2% | 3.6% | 2.6% |
| |
|---|
| Median (15 companies) | 4.7% | 3.0% | 2.4% | 2.2% | 2.1% |
|---|
| Sterlite Technologies ($STRTECH) | 24.9% | 47.2% | 64.9% | 37.4% | 10.3% |
Top companies by ROIC, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Alstom India ($AIL) | 27.2% | 25.6% | 13.2% | 10.7% | -27.7% |
| Ujaas Energy ($UJAAS) | 0.0% | 28.5% | 33.7% | 10.2% | 16.2% |
| Techno Electric & Engineering Company ($TECHELE) | 15.5% | 12.6% | 9.3% | 10.2% | - |
| Techno Electric And Engineering Co. ($TECHNO) | 15.5% | 12.6% | 9.3% | 10.2% | - |
| Emco ($EMCO) | 4.3% | 6.1% | 7.4% | 6.1% | - |
| |
|---|
| Median (18 companies) | 15.3% | 6.5% | 9.3% | 4.0% | 3.9% |
|---|
| Sterlite Technologies ($STRTECH) | 6.0% | 4.3% | 3.0% | 4.5% | 7.4% |
Top companies by Net Debt / EBITDA
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Jyoti Structures ($JYOTISTRUC) | 2.4x | 3.6x | 5.7x | 88.2x | - |
| Suzlon Energy ($SUZLON) | 6.1x | - | 87.6x | 19.1x | 9.5x |
| Bgr Energy Systems ($BGRENERGY) | 2.6x | 3.5x | 4.1x | 13.0x | - |
| Emco ($EMCO) | 8.1x | 7.3x | 5.7x | 7.3x | - |
| Transformers And Rectifiers (India) ($TRIL) | -0.9x | 4.2x | 4.1x | 4.8x | 3.6x |
| |
|---|
| Median (14 companies) | 2.2x | 2.6x | 2.5x | 2.6x | 2.4x |
|---|
| Sterlite Technologies ($STRTECH) | 4.6x | 10.2x | 15.4x | 11.1x | 2.2x |
