Beml reports 83.6% EBITDA growth in 2016 and 1.9 pp EBITDA Margin growth from 2.6% to 4.4%

27-05-2016 • About Beml ($BEML) • By InTwits

Beml reported FY2016 financial results today. Overall the company's long term financial model is characterised by the following facts:

EBITDA Margin is quite volatile: 4.4% in FY2016, 2.6% in FY2015, 4.0% in FY2014, -1.5% in FY2013, 4.8% in FY2012
Beml has low CAPEX intensity: 5 year average CAPEX/Revenue was 2.6%. At the same time it's in pair with industry average of 2.3%
CAPEX is quite volatile: ₹245m in FY2016, ₹408m in FY2015, ₹431m in FY2014, ₹1,337m in FY2013, ₹1,204m in FY2012
The company has potentially unprofitable business model: ROIC is 2.7%

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 6.3%. Despite revenue decline the EBITDA margin expanded. EBITDA Margin increased on 7.0 pp from 2.2% to 9.2% in FY2016.

Net Income margin increased slightly on 1.6 pp from 0.21% to 1.8% in FY2016. During the last 5 years Net Income margin bottomed in FY2013 at -3.0% and was growing since that time.

Investments (CAPEX, working capital and M&A)

The company's CAPEX/Revenue was 0.82% in FY2016. The company showed decline in CAPEX/Revenue of 3.9 pp from 4.8% in FY2013 to 0.82% in FY2016. It's average level of CAPEX/Revenue for the last three years was 1.3%. CAPEX as a % of Revenue declined at -1.1 pp per annum in FY2012-FY2016.

Return on investment

The company operates at low ROIC (2.7%) and ROE (2.5%). ROIC increased on 2.1 pp from 0.58% to 2.7% in FY2016. ROE increased on 2.3 pp from 0.29% to 2.5% in FY2016.

Leverage (Debt)

Company's Net Debt / EBITDA is 3.4x and Debt / EBITDA is 3.8x. Net Debt / EBITDA dropped on 3.6x from 6.9x to 3.4x in FY2016. Debt dropped on 21.0% while cash dropped on 54.7%.

Beml has short term refinancing risk: cash is only 44.7% of short term debt.

Financial and operational results

Beml ($BEML) key annual financial indicators

mln. INR	2012	2013	2014	2015	2016	2016/2015
P&L
Revenue	27,150	28,012	29,037	28,021	29,777	6.3%
SG&A					35
EBITDA	1,303	-412	1,171	721	1,324	83.6%
Net Income	569	-833	61	59	531	795.3%
Balance Sheet
Cash	1,943	779	170	1,451	658	-54.7%
Short Term Debt	6,971	7,648	4,926	2,314	1,472	-36.4%
Long Term Debt	2,477	4,981	4,652	4,139	3,627	-12.4%
Cash flow
Capex	1,204	1,337	431	408	245	-39.9%
Ratios
Revenue growth	2.7%	3.2%	3.7%	-3.5%	6.3%
EBITDA growth	19.7%	-131.6%	-384.4%	-38.4%	83.6%

EBITDA Margin	4.8%	-1.5%	4.0%	2.6%	4.4%	1.9%
SG&A, % of revenue					0.1%
Net Income Margin	2.1%	-3.0%	0.2%	0.2%	1.8%	1.6%
CAPEX, % of revenue	4.4%	4.8%	1.5%	1.5%	0.8%	-0.6%

ROIC	2.6%	-2.9%	1.9%	0.6%	2.7%	2.1%
ROE	2.6%	-3.9%	0.3%	0.3%	2.5%	2.3%
Net Debt/EBITDA	5.8x		8.0x	6.9x	3.4x	-3.6x

Peers in Commercial Vehicles

Below you can find Beml benchmarking vs. other companies in Commercial Vehicles 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
Ashok Leyland ($ASHOKLEY)	-	-3.3%	-8.0%	33.6%	36.0%
Tata Motors ($TATAMOTORS)	35.7%	13.5%	23.3%	13.4%	-
Hmt ($HMT)	-1.3%	-15.9%	-23.9%	2.2%	-
Trf ($TRF)	-	-16.0%	5.4%	-4.2%	-0.3%
V.S.T.Tillers Tractors ($VSTTILLERS)	-	-9.2%	29.6%	-11.6%	17.2%
Median (6 companies)	18.2%	-12.6%	-1.3%	-1.0%	17.2%
Beml ($BEML)	-	3.2%	3.7%	-3.5%	6.3%

Top companies by EBITDA margin, %


Top 5	FY2012	FY2013	FY2014	FY2015	FY2016
V.S.T.Tillers Tractors ($VSTTILLERS)	14.0%	15.1%	19.2%	19.1%	17.5%
Tata Motors ($TATAMOTORS)	12.3%	12.2%	13.5%	14.4%	-
Ashok Leyland ($ASHOKLEY)	9.7%	7.0%	4.1%	10.7%	14.3%
Brady & Morris Engineering Co ($BRADYM)	-	-	-	6.9%	-
Stone India ($STONEIN)	-	-	-	4.7%	-
Median (12 companies)	11.0%	9.6%	8.8%	1.7%	14.3%
Beml ($BEML)	4.8%	-1.5%	4.0%	2.6%	4.4%

Top companies by CAPEX/Revenue, %


Top 5	FY2012	FY2013	FY2014	FY2015	FY2016
Tata Motors ($TATAMOTORS)	8.5%	10.2%	11.8%	12.4%	-
V.S.T.Tillers Tractors ($VSTTILLERS)	2.4%	6.7%	5.9%	4.1%	0.9%
Abg Shipyard ($ABGSHIP)	21.0%	9.1%	15.2%	3.7%	-
Ashok Leyland ($ASHOKLEY)	5.4%	5.2%	3.6%	1.6%	1.3%
Cranex ($CRANEX)	-	-	-	1.0%	-
Median (8 companies)	3.9%	6.0%	4.7%	1.3%	1.0%
Beml ($BEML)	4.4%	4.8%	1.5%	1.5%	0.8%

Top companies by ROIC, %


Top 5	FY2012	FY2013	FY2014	FY2015	FY2016
V.S.T.Tillers Tractors ($VSTTILLERS)	36.4%	29.3%	41.0%	28.0%	25.2%
Tata Motors ($TATAMOTORS)	20.1%	16.6%	17.2%	17.8%	-
Ashok Leyland ($ASHOKLEY)	12.2%	5.8%	-0.5%	7.6%	15.7%
Cranex ($CRANEX)	5.5%	5.3%	5.2%	5.3%	-
Gujarat Apollo Industries ($GUJAPOLLO)	14.5%	11.0%	-4.5%	-2.2%	-
Median (12 companies)	11.4%	7.5%	2.7%	5.3%	15.7%
Beml ($BEML)	2.6%	-2.9%	1.9%	0.6%	2.7%

Top companies by Net Debt / EBITDA


Top 5	FY2012	FY2013	FY2014	FY2015	FY2016
Cranex ($CRANEX)	10.0x	9.9x	9.0x	10.8x	-
Ashok Leyland ($ASHOKLEY)	2.5x	5.0x	17.8x	5.0x	3.1x
Tata Motors ($TATAMOTORS)	1.7x	1.7x	1.2x	1.2x	-
Brady & Morris Engineering Co ($BRADYM)	-	1.5x	-	0.0x	0.0x
Stone India ($STONEIN)	3.1x	3.5x	0.0x	0.0x	-
Median (6 companies)	2.8x	1.7x	9.0x	0.6x	1.6x
Beml ($BEML)	5.8x	-	8.0x	6.9x	3.4x

Beml stock price chart

Beml financials

mln.	FY2010	FY2011	FY2012

Revenue	32,099	26,438	27,150
EBITDA	2,932	1,088	1,303
Net income	2,245	1,469	569.1
CAPEX	679.8	1,698	1,204
Debt	9,159	8,026	9,448
Cash	5,672	483.0	1,943

About Beml

BEML Limited provides products and services to the mining and construction, rail and metro, and defense and aerospace sectors worldwide. The company offers mining machinery for opencast and underground mines; and produces machines, such as electric rope shovels, hydraulic excavators, bulldozers, wheel loaders, wheel dozers, dump trucks, motor graders, pipe layers, tire handlers, water sprinklers, backhoe loaders, mammoth walking draglines, side discharge loaders, load haul dumpers, winches, winders, granby cars, skips, etc. It also supplies equipment for railways comprising integral rail coaches, overhead electric inspection cars, postal vans, AC/DC electric multiple units, D-EMUs, utility track vehicles, track laying equipment, broad-gauge rail buses, treasury vans, spoil disposal units, etc. In addition, the company manufactures defense equipment, including Tatra vehicles for all terrain operations, which comprise bridge layers, field artillery tractors, medium and heavy recovery vehicles, pontoon mainstream bridge systems, crash fire tenders, mobile mast vehicles, etc.; and supplies engineering mine ploughs, tank transportation trailers, weapon loading equipment, armored recovery vehicles, mil rail coaches and wagons, aircraft weapon loading trolleys, and aircraft towing tractors, as well as jigs, fixtures, and ground support and test equipment for the aerospace market. Further, BEML Limited provides diesel engines and generator sets; hydraulic pumps, hydraulic cylinders, hydro-pneumatic suspensions, and control valves; and transmission, axle, and bevel gear products, as well as ejector and air cleaner assembly, and final drive products. Additionally, it distributes industrial products and intermediaries; and exports engineering goods and other equipment. The company, formerly known as Bharat Earth Movers Limited, was founded in 1964 and is based in Bengaluru, India.