Elgi Equipments EBITDA surged on 55.6% and EBITDA Margin increased on 3.1 pp from 6.7% to 9.8%
27-05-2016 • About Elgi Equipments (
$ELGIEQUIP) • By InTwits
Elgi Equipments reported FY2016 financial results today. Overall the company's long term financial model is characterised by the following facts:
- Elgi Equipments has medium CAPEX intensity: 5 year average CAPEX/Revenue was 8.9%. At the same time it's a lot of higher than industry average of 5.0%.
- CAPEX is quite volatile: ₹315m in FY2016, ₹568m in FY2015, ₹1,327m in FY2014, ₹2,750m in FY2013, ₹395m in FY2012
- The company has business model with average profitability: ROIC is 10.8%
- It operates with high leverage: Net Debt/EBITDA is 1.6x while industry average is 0.4x
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 6.9%. Revenue growth happened at the same time with EBITDA margin expansion. EBITDA Margin increased on 3.1 pp from 6.7% to 9.8% in FY2016. During FY2012-FY2016 EBITDA Margin bottomed in FY2015 at 6.7%.
Net Income margin increased slightly on 0.85 pp from 3.7% to 4.5% in FY2016. During the last 5 years Net Income margin bottomed in FY2014 at 3.4% and was growing since that time.
Investments (CAPEX, working capital and M&A)
In FY2016 the company had CAPEX/Revenue of 2.2%. CAPEX/Revenue dropped on 21.8 pp from 24.0% in FY2013 to 2.2% in FY2016. Average CAPEX/Revenue for the last three years was 5.5%. During the last 5 years CAPEX as a % of Revenue topped in FY2013 at 24.0% and was declining since that time.
Return on investment
The company operates at good ROE (12.2%) while ROIC is low (10.8%). ROIC increased on 4.8 pp from 6.0% to 10.8% in FY2016. ROE increased on 2.2 pp from 10.1% to 12.2% in FY2016. During FY2012-FY2016 ROIC bottomed in FY2015 at 6.0%. During the last 5 years ROE bottomed in FY2015 at 10.1%.
Leverage (Debt)
Debt level is 1.6x Net Debt / EBITDA and 2.2x Debt / EBITDA. Net Debt / EBITDA dropped on 1.7x from 3.3x to 1.6x in FY2016. Debt dropped on 17.1% while cash surged on 10.1%. During the last 5 years Net Debt/EBITDA topped in FY2015 at 3.3x.
Elgi Equipments has short term refinancing risk: cash is only 51.9% of short term debt.
Valuation and dividends
Elgi Equipments's trades at EV/EBITDA 20.4x and P/E 40.9x while industy averages are 17.8x and 21.9x. Elgi Equipments's EV/(EBITDA-CAPEX) is 26.5x with the industry average at 22.8x.
Financial and operational results
Elgi Equipments ($ELGIEQUIP) key annual financial indicators| mln. INR | 2012 | 2013 | 2014 | 2015 | 2016 | 2016/2015 |
|---|
P&L
|
|---|
| Revenue | 9,917 | 11,445 | 13,504 | 13,143 | 14,055 | 6.9% |
| EBITDA | 1,146 | 1,034 | 994 | 884 | 1,376 | 55.6% |
| Net Income | 756 | 602 | 455 | 481 | 634 | 31.7% |
Balance Sheet
|
|---|
| Cash | 1,456 | 549 | 683 | 779 | 857 | 10.1% |
| Short Term Debt | 91 | 678 | 1,228 | 1,980 | 1,650 | -16.7% |
| Long Term Debt | 0 | 2,198 | 2,145 | 1,688 | 1,391 | -17.6% |
Cash flow
|
|---|
| Capex | 395 | 2,750 | 1,327 | 568 | 315 | -44.6% |
Ratios
|
|---|
| Revenue growth | 5.4% | 15.4% | 18.0% | -2.7% | 6.9% | |
| EBITDA growth | -20.5% | -9.8% | -3.9% | -11.0% | 55.6% | |
|
|---|
| EBITDA Margin | 11.6% | 9.0% | 7.4% | 6.7% | 9.8% | 3.1% |
| Net Income Margin | 7.6% | 5.3% | 3.4% | 3.7% | 4.5% | 0.8% |
| CAPEX, % of revenue | 4.0% | 24.0% | 9.8% | 4.3% | 2.2% | -2.1% |
|
|---|
| ROIC | 23.4% | 14.1% | 9.2% | 6.0% | 10.8% | 4.8% |
| ROE | 20.5% | 14.5% | 10.2% | 10.1% | 12.2% | 2.2% |
| Net Debt/EBITDA | -1.2x | 2.3x | 2.7x | 3.3x | 1.6x | -1.7x |
Peers in Industrial Machinery
Below you can find Elgi Equipments benchmarking vs. other companies in Industrial Machinery 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 |
|---|
| Lloyd Electric & Engineering ($LLOYDELENG) | - | - | - | 22.3% | 27.3% |
| Kabra Extrusiontechnik ($KABRAEXTRU) | - | -8.7% | 28.4% | 21.6% | 10.2% |
| Akar Tools ($AKARTOOL) | 21.1% | 2.1% | -2.3% | 16.7% | - |
| Honda Siel Power Products ($HONDAPOWER) | - | 2.4% | 5.0% | 16.5% | 4.7% |
| Mazda ($MAZDALTD) | 22.1% | 14.7% | -15.6% | 16.2% | - |
| |
|---|
| Median (28 companies) | 11.3% | 2.1% | -0.4% | 3.5% | 7.6% |
|---|
| Elgi Equipments ($ELGIEQUIP) | - | 15.4% | 18.0% | -2.7% | 6.9% |
Top companies by Gross margin, %
| Top | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Bell Agromachina ($BELAGRO) | 0.0% | 0.0% | 0.0% | 0.0% | 0.0% |
| |
|---|
| Median (1 company) | 0.0% | 0.0% | 0.0% | 0.0% | 0.0% |
|---|
Top companies by EBITDA margin, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Texmaco Infrastructure & Holdings ($TEXINFRA) | - | - | - | 40.5% | - |
| Dhp India ($DHPIND) | - | - | - | 26.3% | - |
| Shilp Gravures ($SHILGRAVQ) | - | - | - | 19.4% | - |
| Solitaire Machine Tools ($SOLIMAC) | - | - | - | 19.4% | - |
| Wendt (India) ($WENDT) | 28.3% | 21.6% | 18.6% | 19.0% | 16.5% |
| |
|---|
| Median (44 companies) | 11.2% | 9.6% | 10.6% | 10.5% | 10.3% |
|---|
| Elgi Equipments ($ELGIEQUIP) | 11.6% | 9.0% | 7.4% | 6.7% | 9.8% |
Top companies by CAPEX/Revenue, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Texmaco Infrastructure & Holdings ($TEXINFRA) | - | - | - | 14.0% | - |
| Wendt (India) ($WENDT) | 13.5% | 9.0% | 8.8% | 9.4% | 9.3% |
| Ingersoll-Rand (India) ($INGERRAND) | 4.3% | 10.9% | 3.6% | 9.2% | 6.7% |
| Kabra Extrusiontechnik ($KABRAEXTRU) | 6.5% | 1.8% | 0.5% | 8.8% | 16.2% |
| Forbes & Company ($FORBESCO) | 1.8% | 2.6% | 3.0% | 5.1% | - |
| |
|---|
| Median (22 companies) | 5.8% | 4.1% | 2.8% | 3.1% | 3.4% |
|---|
| Elgi Equipments ($ELGIEQUIP) | 4.0% | 24.0% | 9.8% | 4.3% | 2.2% |
Top companies by ROIC, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Greaves Cotton ($GREAVESCOT) | - | 24.8% | 16.3% | 26.7% | 25.7% |
| Gmm Pfaudler ($GMM) | -76.2% | 6.8% | 17.4% | 18.2% | 16.1% |
| Lakshmi Machine Works ($LAXMIMACH) | 18.0% | 11.7% | 16.2% | 17.6% | 18.2% |
| Wpil ($WPIL) | - | 25.3% | 21.4% | 15.7% | 4.8% |
| Honda Siel Power Products ($HONDAPOWER) | 16.9% | 8.8% | 11.5% | 15.3% | 18.3% |
| |
|---|
| Median (53 companies) | 12.8% | 10.7% | 10.8% | 13.0% | 14.2% |
|---|
| Elgi Equipments ($ELGIEQUIP) | 23.4% | 14.1% | 9.2% | 6.0% | 10.8% |
Top companies by Net Debt / EBITDA
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Forbes & Company ($FORBESCO) | 2.2x | 3.3x | 4.7x | 6.3x | - |
| Nitin Fire Protection Industries ($NITINFIRE) | 3.6x | 3.5x | 3.0x | 3.7x | - |
| Lloyd Electric & Engineering ($LLOYDELENG) | - | - | 3.7x | 3.2x | 2.7x |
| Elecon Engineering Co ($ELECON) | 3.0x | 3.2x | 4.0x | 3.1x | 3.9x |
| Dynamatic Technologies ($DYNAMATECH) | 5.0x | 4.1x | 3.4x | 2.7x | 3.8x |
| |
|---|
| Median (35 companies) | 1.0x | 1.4x | 0.0x | 0.0x | 0.0x |
|---|
| Elgi Equipments ($ELGIEQUIP) | -1.2x | 2.3x | 2.7x | 3.3x | 1.6x |
