Datamatics Global Services EBITDA dropped on 12.2% and Revenue decreased slightly on 1.4%
27-05-2016 • About Datamatics Global Services (
$DATAMATICS) • By InTwits
Datamatics Global Services reported FY2016 financial results today. Here are the key drivers of the company's long term financial model:
- Datamatics Global Services has medium CAPEX intensity: 5 year average CAPEX/Revenue was 8.4%. At the same time it's a lot of higher than industry average of 5.0%.
- CAPEX is quite volatile: ₹283m in FY2016, ₹180m in FY2015, ₹947m in FY2014, ₹171m in FY2013, ₹893m in FY2012
- The company has business model with low profitability: ROIC is 7.8%
- It operates with medium-size leverage: Net Debt/EBITDA is 0.4x while industry average is -0.6x
Below you can find a comprehensive analysis of the key data driving the company's performance and the stock price.
Revenue and profitability
Datamatics Global Services's Revenue decreased slightly on 1.4%. Revenue decline was accelerating on average at -13.5 pp per annum in the last 5 years. Revenue decline was accompanies by EBITDA margin decline. EBITDA Margin decreased slightly on 1.1 pp from 10.4% to 9.3% in FY2016. During the last 5 years EBITDA Margin topped in FY2014 at 12.4% and was declining since that time.
Net Income margin showed almost no change in FY2016.
Investments (CAPEX, working capital and M&A)
In FY2016 Datamatics Global Services had CAPEX/Revenue of 3.5%. The company showed almost no change in CAPEX/Revenue from FY2013 to FY2016. For the last three years the average CAPEX/Revenue was 6.2%.
Return on investment
The company operates at low ROIC (7.8%) and ROE (11.2%). ROIC decreased on 3.5 pp from 11.3% to 7.8% in FY2016. ROE decreased slightly on 0.85 pp from 12.0% to 11.2% in FY2016. During the last 5 years ROIC topped in FY2014 at 16.4% and was declining since that time.
Leverage (Debt)
Debt level is 0.4x Net Debt / EBITDA and 1.2x Debt / EBITDA. Net Debt / EBITDA increased on 0.1x from 0.3x to 0.4x in FY2016. Debt decreased on 2.3% while cash decreased on 5.1%.
Datamatics Global Services has no short term refinancing risk: cash is higher than short term debt (110.9%).
Financial and operational results
Datamatics Global Services ($DATAMATICS) key annual financial indicators| mln. INR | 2012 | 2013 | 2014 | 2015 | 2016 | 2016/2015 |
|---|
P&L
|
|---|
| Revenue | 4,419 | 5,500 | 7,338 | 8,280 | 8,162 | -1.4% |
| EBITDA | 407 | 515 | 909 | 863 | 757 | -12.2% |
| Net Income | 267 | 268 | 487 | 432 | 448 | 3.8% |
Balance Sheet
|
|---|
| Cash | 250 | 218 | 465 | 648 | 615 | -5.1% |
| Short Term Debt | 471 | 390 | 393 | 535 | 555 | 3.7% |
| Long Term Debt | 0 | 0 | 520 | 388 | 346 | -10.6% |
Cash flow
|
|---|
| Capex | 893 | 171 | 947 | 180 | 283 | 57.4% |
Ratios
|
|---|
| Revenue growth | 60.5% | 24.5% | 33.4% | 12.8% | -1.4% | |
| EBITDA growth | 164.3% | 26.5% | 76.7% | -5.1% | -12.2% | |
|
|---|
| EBITDA Margin | 9.2% | 9.4% | 12.4% | 10.4% | 9.3% | -1.1% |
| Net Income Margin | 6.0% | 4.9% | 6.6% | 5.2% | 5.5% | 0.3% |
| CAPEX, % of revenue | 20.2% | 3.1% | 12.9% | 2.2% | 3.5% | 1.3% |
|
|---|
| ROIC | 9.8% | 11.4% | 16.4% | 11.3% | 7.8% | -3.5% |
| ROE | 10.2% | 9.4% | 15.4% | 12.0% | 11.2% | -0.9% |
| Net Debt/EBITDA | 0.5x | 0.3x | 0.5x | 0.3x | 0.4x | 0.1x |
Peers in IT Software Products
Below we provide Datamatics Global Services benchmarking against other companies in IT Software Products 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 |
|---|
| Twinstar Industries ($TWINSTAR) | 204.5% | 59.8% | 38.8% | 40.3% | - |
| Atishay Infotech ($ATISHAY) | - | 6.9% | 21.8% | 28.2% | -2.2% |
| Dion Global Solutions ($DION) | - | 40.8% | -9.5% | 27.8% | -14.4% |
| Avance Technologies ($AVANCE) | - | -17.9% | -30.8% | 20.3% | -4.6% |
| Softsol India ($SOFTSOL) | -10.4% | 9.3% | -20.4% | 14.1% | - |
| |
|---|
| Median (16 companies) | 13.1% | 15.4% | 14.2% | 9.4% | -2.3% |
|---|
| Datamatics Global Services ($DATAMATICS) | - | 24.5% | 33.4% | 12.8% | -1.4% |
Top companies by EBITDA margin, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Atishay Infotech ($ATISHAY) | 35.7% | 28.1% | 25.8% | 24.5% | 21.9% |
| Subex ($SUBEX) | 27.3% | 17.0% | 24.9% | 23.6% | 20.8% |
| Tata Elxsi ($TATAELXSI) | 13.8% | 11.9% | 17.6% | 20.9% | 23.0% |
| Cambridge Technology Enterprises ($CTE) | - | - | - | 20.9% | - |
| Virinchi Technologies ($VIRNICHIQ) | - | - | - | 17.4% | - |
| |
|---|
| Median (23 companies) | 7.9% | 8.5% | 9.9% | 9.2% | 12.4% |
|---|
| Datamatics Global Services ($DATAMATICS) | 9.2% | 9.4% | 12.4% | 10.4% | 9.3% |
Top companies by CAPEX/Revenue, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Aurionpro Solutions ($AURIONPRO) | 17.5% | 12.3% | 12.6% | 13.4% | - |
| Mastek ($MASTKBBPH) | 2.2% | - | 0.0% | 4.9% | 2.4% |
| Dion Global Solutions ($DION) | 39.9% | 11.9% | 29.6% | 4.0% | 18.4% |
| Tata Elxsi ($TATAELXSI) | 5.3% | 5.4% | 3.1% | 3.9% | 3.6% |
| Polaris Financial Technology ($POLARIS) | 7.2% | 2.5% | 1.5% | 3.9% | 1.6% |
| |
|---|
| Median (9 companies) | 3.1% | 6.9% | 1.9% | 3.9% | 2.0% |
|---|
| Datamatics Global Services ($DATAMATICS) | 20.2% | 3.1% | 12.9% | 2.2% | 3.5% |
Top companies by ROIC, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Tata Elxsi ($TATAELXSI) | 22.5% | 19.1% | 38.3% | 55.4% | 65.9% |
| Mindteck (India) ($MINDTECK) | -2.6% | 1.2% | 20.0% | 17.5% | 10.6% |
| Blue Star Infotech ($BLUESTINFO) | - | 7.1% | 16.3% | 17.4% | - |
| Polaris Financial Technology ($POLARIS) | 19.5% | 15.1% | 12.6% | 16.2% | 24.8% |
| Aurionpro Solutions ($AURIONPRO) | 8.6% | 8.6% | 5.9% | 12.1% | - |
| |
|---|
| Median (31 companies) | 3.8% | 4.7% | 14.4% | 14.2% | 16.4% |
|---|
| Datamatics Global Services ($DATAMATICS) | 9.8% | 11.4% | 16.4% | 11.3% | 7.8% |
Top companies by Net Debt / EBITDA
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Subex ($SUBEX) | 4.6x | 13.1x | 8.5x | 8.0x | 0.9x |
| Dion Global Solutions ($DION) | 11.8x | 11.3x | - | 7.4x | - |
| Aurionpro Solutions ($AURIONPRO) | 1.7x | 1.7x | 1.9x | 1.2x | - |
| Saksoft ($SAKSOFT) | 2.8x | 2.3x | 0.0x | 1.2x | 0.3x |
| Virinchi Technologies ($VIRNICHIQ) | 0.8x | 1.1x | - | 0.0x | - |
| |
|---|
| Median (19 companies) | 0.7x | 0.0x | 0.0x | 0.0x | -0.7x |
|---|
| Datamatics Global Services ($DATAMATICS) | 0.5x | 0.3x | 0.5x | 0.3x | 0.4x |
