Trent reports 85.4% EBITDA growth in 2016 and 2.6 pp EBITDA Margin growth from 3.3% to 5.9%
26-05-2016 • About Trent (
$TRENT) • By InTwits
Trent reported FY2016 financial results today. Overall the company's long term financial model is characterised by the following facts:
- EBITDA Margin is expanding: 5.9% in FY2016 vs. 3.3% in FY2015 vs. -2.3% in FY2012
- EBITDA Margin is quite volatile: 5.9% in FY2016, 3.3% in FY2015, 0.7% in FY2014, -0.4% in FY2013, -2.3% in FY2012
- Trent has medium CAPEX intensity: 5 year average CAPEX/Revenue was 6.8%. At the same time it's in pair with industry average of 11.8%
- CAPEX is quite volatile: ₹5,807m in FY2016, ₹930m in FY2015, ₹1,528m in FY2014, ₹1,321m in FY2013, ₹762m in FY2012
- The company has potentially unprofitable business model: ROIC is 4.3%
- It operates with high leverage: Net Debt/EBITDA is 2.4x while industry average is 1.8x
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 increased on 4.9%. Revenue decline was accelerating on average at -5.2 pp per annum in the last 5 years. Having declining revenue the company managed to increase EBITDA margin. EBITDA Margin increased on 2.2 pp from 17.2% to 19.4% in FY2016. EBITDA Margin grew at 2.0 pp per annum in the last 5 years.
Net Income margin decreased on 3.0 pp from 5.7% to 2.6% in FY2016. During FY2012-FY2016 Net Income margin topped in FY2015 at 5.7%.
Investments (CAPEX, working capital and M&A)
In FY2016 the company had CAPEX/Revenue of 7.0%. CAPEX/Revenue increased slightly on 1.6 pp from 5.4% in FY2013 to 7.0% in FY2016. For the last three years the average CAPEX/Revenue was 6.6%. Trent maintained rich investment policy and has spent a lot to CAPEX (119% of EBITDA). During the last 5 years CAPEX as a % of Revenue bottomed in FY2013 at 5.4% and was growing since that time.
Return on investment
The company operates at low ROIC (4.3%) and ROE (4.4%). ROIC increased on 4.2 pp from 0.12% to 4.3% in FY2016. ROE decreased on 6.3 pp from 10.7% to 4.4% in FY2016. ROIC grew at 2.5 pp per annum in FY2012-FY2016. During the last 5 years ROE topped in FY2015 at 10.7%.
Leverage (Debt)
Debt level is 2.4x Net Debt / EBITDA and 2.8x Debt / EBITDA. Net Debt / EBITDA surged on 1.5x from 0.9x to 2.4x in FY2016. Debt surged on 235% while cash surged on 12.7%.
Trent has short term refinancing risk: cash is only 19.1% of short term debt.
Financial and operational results
Trent ($TRENT) key annual financial indicators| mln. INR | 2012 | 2013 | 2014 | 2015 | 2016 | 2016/2015 |
|---|
P&L
|
|---|
| Revenue | 18,449 | 21,320 | 23,330 | 22,843 | 23,973 | 4.9% |
| SG&A | | | | | 554 | |
| EBITDA | -426 | -81 | 167 | 761 | 1,410 | 85.4% |
| Net Income | -378 | -268 | -186 | 1,293 | 629 | -51.3% |
Balance Sheet
|
|---|
| Cash | 402 | 814 | 556 | 516 | 581 | 12.7% |
| Short Term Debt | 513 | 105 | 66 | 44 | 3,040 | 6,888.3% |
| Long Term Debt | 2,500 | 3,250 | 3,250 | 1,125 | 875 | -22.2% |
Cash flow
|
|---|
| Capex | 1,632 | 1,159 | 1,361 | 1,580 | 1,681 | 6.4% |
Ratios
|
|---|
| Revenue growth | 22.1% | 15.6% | 9.4% | -2.1% | 4.9% | |
| EBITDA growth | -286.0% | -80.9% | -304.7% | 356.6% | 85.4% | |
|
|---|
| EBITDA Margin | -2.3% | -0.4% | 0.7% | 3.3% | 5.9% | 2.6% |
| SG&A, % of revenue | | | | | 2.3% | |
| Net Income Margin | -2.0% | -1.3% | -0.8% | 5.7% | 2.6% | -3.0% |
| CAPEX, % of revenue | 8.8% | 5.4% | 5.8% | 6.9% | 7.0% | 0.1% |
|
|---|
| ROIC | -6.2% | -3.5% | -2.6% | 0.1% | 4.3% | 4.2% |
| ROE | -3.5% | -2.2% | -1.7% | 10.7% | 4.4% | -6.3% |
| Net Debt/EBITDA | | | 16.6x | 0.9x | 2.4x | 1.5x |
Peers in Department Stores
Below we provide Trent benchmarking against other companies in Department Stores 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 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| V-Mart Retail ($VMART) | 31.7% | 36.0% | 49.9% | 25.3% | - |
| Pantaloons Fashion & Retail ($PFRL) | - | 7,273.1% | 29.3% | 11.4% | 227.4% |
| Future Market Networks ($FMNL) | 58.6% | -3.8% | 1.1% | -2.4% | - |
| |
|---|
| Median (3 companies) | 45.2% | 36.0% | 29.3% | 11.4% | 160.3% |
|---|
| Trent ($TRENT) | - | 15.6% | 9.4% | -2.1% | 4.9% |
Top companies by EBITDA margin, %
| Top | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Store One Retail India ($STOREONE) | - | - | - | 31.2% | 31.0% |
| V-Mart Retail ($VMART) | 10.3% | 10.5% | 9.4% | 8.9% | - |
| Pantaloons Fashion & Retail ($PFRL) | 2.5% | 5.5% | 2.1% | 4.0% | 6.6% |
| Rei Six Ten Retail ($REISIXTEN) | - | - | - | -2.2% | - |
| |
|---|
| Median (4 companies) | 10.3% | 8.0% | 9.4% | 6.4% | 18.8% |
|---|
| Trent ($TRENT) | -2.3% | -0.4% | 0.7% | 3.3% | 5.9% |
Top companies by CAPEX/Revenue, %
| Top | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Pantaloons Fashion & Retail ($PFRL) | 0.0% | 2.3% | 5.7% | 6.3% | 18.3% |
| V-Mart Retail ($VMART) | 4.8% | 5.8% | 5.8% | 4.7% | - |
| |
|---|
| Median (2 companies) | 4.8% | 4.1% | 5.8% | 5.5% | 18.3% |
|---|
| Trent ($TRENT) | 8.8% | 5.4% | 5.8% | 6.9% | 7.0% |
Top companies by ROIC, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| V-Mart Retail ($VMART) | 26.3% | 23.5% | 21.9% | 26.3% | - |
| Pantaloons Fashion & Retail ($PFRL) | 33.2% | 1.3% | -3.6% | -6.8% | 3.0% |
| Rei Six Ten Retail ($REISIXTEN) | 1.2% | -3.4% | - | - | - |
| Future Market Networks ($FMNL) | 2.5% | - | - | - | - |
| Store One Retail India ($STOREONE) | - | - | - | - | - |
| |
|---|
| Median (5 companies) | 14.4% | 1.3% | 9.1% | 9.8% | 3.0% |
|---|
| Trent ($TRENT) | -6.2% | -3.5% | -2.6% | 0.1% | 4.3% |
Top companies by Net Debt / EBITDA
| Top | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Pantaloons Fashion & Retail ($PFRL) | -0.1x | 23.9x | 30.0x | 17.8x | 4.6x |
| V-Mart Retail ($VMART) | 1.3x | 0.5x | 0.8x | 0.4x | - |
| Store One Retail India ($STOREONE) | - | - | - | 0.0x | 0.0x |
| |
|---|
| Median (3 companies) | 0.6x | 0.5x | 30.0x | 0.4x | 2.3x |
|---|
| Trent ($TRENT) | - | - | 16.6x | 0.9x | 2.4x |
