Va Tech Wabag reports 5.5% EBITDA growth in 2016 and almost no change in EBITDA Margin of 8.7%
26-05-2016 • About Va Tech Wabag (
$WABAG) • By InTwits
Va Tech Wabag reported FY2016 financial results today. Here are the key drivers of the company's long term financial model:
- EBITDA Margin is relatively stable: 8.7% in FY2016 vs. 8.6% in FY2015 vs. 9.1% in FY2012
- Va Tech Wabag has low CAPEX intensity: 5 year average CAPEX/Revenue was 2.1%. At the same time it's a lot of higher than industry average of 1.7%.
- CAPEX is quite volatile: ₹152m in FY2016, ₹287m in FY2015, ₹1,033m in FY2014, ₹419m in FY2013, ₹226m in FY2012
- The company has highly profitable business model: ROIC is 15.8%
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 increased on 4.7%. Despite revenue decline the EBITDA margin expanded. EBITDA Margin increased slightly on 1.7 pp from 25.3% to 27.0% in FY2016.
Gross Margin decreased slightly on 0.93 pp from 21.0% to 20.0% in FY2016. SG&A as a % of Revenue showed almost no change in FY2016.
Net Income margin decreased slightly on 0.90 pp from 4.5% to 3.6% in FY2016. During the last 5 years Net Income margin topped in FY2013 at 5.6% and was declining since that time.
Investments (CAPEX, working capital and M&A)
The company's CAPEX/Revenue was 0.60% in FY2016. CAPEX/Revenue decreased slightly on 2.0 pp from 2.6% in FY2013 to 0.60% in FY2016. Average CAPEX/Revenue for the last three years was 2.1%. During the last 5 years CAPEX as a % of Revenue topped in FY2014 at 4.6% and was declining since that time.
Return on investment
The company operates at good ROIC (15.8%) while ROE is low (9.7%). ROIC decreased on 2.7 pp from 18.5% to 15.8% in FY2016. ROE decreased on 2.9 pp from 12.6% to 9.7% in FY2016. During the last 5 years ROIC topped in FY2014 at 21.1% and was declining since that time. During FY2012-FY2016 ROE topped in FY2014 at 14.6% and was declining since that time.
Leverage (Debt)
Debt level is 0.1x Net Debt / EBITDA and 1.8x Debt / EBITDA. Net Debt / EBITDA surged on 0.8x from -0.6x to 0.1x in FY2016. Debt surged on 115% while cash jumped on 15.2%. Net Debt/EBITDA grew at 0.4x per annum in FY2012-FY2016.
Va Tech Wabag has no short term refinancing risk: cash is higher than short term debt (105.9%).
Valuation and dividends
The company's trades at EV/EBITDA 13.8x and P/E 32.8x while industy averages are 17.8x and 21.9x. Va Tech Wabag's EV/(EBITDA-CAPEX) is 14.8x with the industry average at 22.8x.
Management team
Va Tech Wabag's CEO Rajiv Devaraj Mittal has spent 20 years with the company. Parthasarathy Gopalan is a the company's CFO. Parthasarathy Gopalan has spent 4 years at the company.
Financial and operational results
Va Tech Wabag ($WABAG) key annual financial indicators| mln. INR | 2012 | 2013 | 2014 | 2015 | 2016 | 2016/2015 |
|---|
P&L
|
|---|
| Revenue | 14,435 | 16,189 | 22,386 | 24,352 | 25,486 | 4.7% |
| Gross Profit | | | 5,498 | 5,103 | 5,103 | 0.0% |
| SG&A | | | | 47 | 29 | -37.4% |
| EBITDA | 1,318 | 1,549 | 2,096 | 2,100 | 2,216 | 5.5% |
| Net Income | 738 | 903 | 1,134 | 1,101 | 922 | -16.3% |
Balance Sheet
|
|---|
| Cash | 3,381 | 2,866 | 2,668 | 3,111 | 3,583 | 15.2% |
| Short Term Debt | 1,244 | 796 | 1,133 | 1,113 | 3,383 | 203.9% |
| Long Term Debt | 4 | 26 | 450 | 693 | 501 | -27.7% |
Cash flow
|
|---|
| Capex | 226 | 419 | 1,033 | 287 | 152 | -47.1% |
Ratios
|
|---|
| Revenue growth | 16.2% | 12.1% | 38.3% | 8.8% | 4.7% | |
| EBITDA growth | 8.9% | 17.5% | 35.3% | 0.2% | 5.5% | |
|
|---|
| Gross Margin | | | 24.6% | 21.0% | 20.0% | -0.9% |
| EBITDA Margin | 9.1% | 9.6% | 9.4% | 8.6% | 8.7% | 0.1% |
| SG&A, % of revenue | | | | 0.2% | 0.1% | -0.1% |
| Net Income Margin | 5.1% | 5.6% | 5.1% | 4.5% | 3.6% | -0.9% |
| CAPEX, % of revenue | 1.6% | 2.6% | 4.6% | 1.2% | 0.6% | -0.6% |
|
|---|
| ROIC | 17.9% | 18.2% | 21.1% | 18.5% | 15.8% | -2.7% |
| ROE | 12.2% | 13.3% | 14.6% | 12.6% | 9.7% | -2.9% |
| Net Debt/EBITDA | -1.6x | -1.3x | -0.5x | -0.6x | 0.1x | 0.8x |
Peers in Utilities:Non-Elec.
Below we provide Va Tech Wabag benchmarking against other companies in Utilities:Non-Elec. 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 |
|---|
| Gail (India) ($GAIL) | - | 15.5% | 21.1% | -1.8% | -14.3% |
| A2Z Maintenance & Engineering Services ($A2ZMES) | -0.5% | -32.6% | -22.6% | -15.4% | - |
| |
|---|
| Median (2 companies) | -0.5% | -8.5% | -0.7% | -8.6% | -14.3% |
|---|
| Va Tech Wabag ($WABAG) | - | 12.1% | 38.3% | 8.8% | 4.7% |
Top companies by EBITDA margin, %
| Top | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Gail (India) ($GAIL) | 16.0% | 14.7% | 13.0% | 9.3% | 8.5% |
| A2Z Maintenance & Engineering Services ($A2ZMES) | 7.8% | -1.3% | -12.2% | -15.3% | - |
| |
|---|
| Median (2 companies) | 11.9% | 6.7% | 0.4% | -3.0% | 8.5% |
|---|
| Va Tech Wabag ($WABAG) | 9.1% | 9.6% | 9.4% | 8.6% | 8.7% |
Top companies by CAPEX/Revenue, %
| Top | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Gail (India) ($GAIL) | 22.4% | 17.7% | 8.5% | 4.8% | 2.8% |
| |
|---|
| Median (1 company) | 28.9% | 19.7% | 9.9% | 4.8% | 2.8% |
|---|
| Va Tech Wabag ($WABAG) | 1.6% | 2.6% | 4.6% | 1.2% | 0.6% |
Top companies by ROIC, %
| Top | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Gail (India) ($GAIL) | 16.5% | 13.8% | 12.1% | 7.3% | 5.5% |
| A2Z Maintenance & Engineering Services ($A2ZMES) | 4.3% | -2.3% | -5.2% | -6.5% | - |
| |
|---|
| Median (2 companies) | 10.4% | 5.7% | 3.5% | 0.4% | 5.5% |
|---|
| Va Tech Wabag ($WABAG) | 17.9% | 18.2% | 21.1% | 18.5% | 15.8% |
Top companies by Net Debt / EBITDA
| Top | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Gail (India) ($GAIL) | 1.4x | 1.8x | 1.9x | 3.0x | 1.1x |
| |
|---|
| Median (1 company) | 5.9x | 1.8x | 1.9x | 3.0x | 1.1x |
|---|
| Va Tech Wabag ($WABAG) | -1.6x | -1.3x | -0.5x | -0.6x | 0.1x |
