Oil India reports 23.2% Net Income decline in 2016 and 1.2 pp EBITDA Margin decline from 38.3% to 37.1%
27-05-2016 • About Oil India (
$OIL) • By InTwits
Oil India reported FY2016 financial results today. Overall the company's long term financial model is characterised by the following facts:
- Oil India has high CAPEX intensity: 5 year average CAPEX/Revenue was 24.1%. At the same time it's in pair with industry average of 21.3%
- CAPEX is quite volatile: ₹30,133m in FY2016, ₹29,987m in FY2015, ₹28,520m in FY2014, ₹17,867m in FY2013, ₹9,260m in FY2012
- The company has business model with low profitability: ROIC is 7.1%
- It operates with medium-size leverage: Net Debt/EBITDA is 0.2x while industry average is 0.2x
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 decreased slightly on 0.97%. During FY2012-FY2016 Revenue growth bottomed in FY2014 at -2.8% and was accelerating since that time. Revenue decline was worsened by EBITDA margin decline. EBITDA Margin decreased slightly on 1.2 pp from 38.3% to 37.1% in FY2016.
Net Income margin decreased on 6.2 pp from 27.5% to 21.4% in FY2016. Net Income margin stuck to a declining trend at -3.6 pp per annum in FY2012-FY2016.
Investments (CAPEX, working capital and M&A)
The company's CAPEX/Revenue was 32.1% in FY2016. Oil India showed fast CAPEX/Revenue growth of 14.2 pp from 17.9% in FY2013 to 32.1% in FY2016. For the last three years the average CAPEX/Revenue was 31.1%. The company invested a big chunk of EBITDA (86.6%) to CAPEX which didn't stop revenue from falling. CAPEX as a % of Revenue grew at 5.9 pp per annum in FY2012-FY2016.
Return on investment
The company operates at low ROIC (7.1%) and ROE (9.1%). ROIC decreased slightly on 1.5 pp from 8.6% to 7.1% in FY2016. ROE decreased on 3.3 pp from 12.4% to 9.1% in FY2016. ROIC followed a declining trend at -3.5 pp per annum in FY2012-FY2016. ROE stuck to a declining trend at -3.0 pp per annum in the last 5 years.
Leverage (Debt)
Company's Net Debt / EBITDA is 0.2x and Debt / EBITDA is 2.9x. Net Debt / EBITDA surged on 0.2x from 0.014x to 0.2x in FY2016. Debt surged on 15.2% while cash increased on 8.1%.
Oil India has no short term refinancing risk: cash is higher than short term debt (1,059.4%).
Valuation and dividends
The company's trades at EV/EBITDA 6.2x and P/E 10.5x while industy averages are 17.8x and 21.9x. The company's EV/(EBITDA-CAPEX) is 46.2x with the industry average at 22.8x.
Financial and operational results
Oil India ($OIL) key annual financial indicators| mln. INR | 2012 | 2013 | 2014 | 2015 | 2016 | 2016/2015 |
|---|
P&L
|
|---|
| Revenue | 98,632 | 99,681 | 96,898 | 94,767 | 93,847 | -1.0% |
| EBITDA | 42,153 | 43,532 | 36,462 | 36,324 | 34,814 | -4.2% |
| Net Income | 34,465 | 35,921 | 29,903 | 26,084 | 20,039 | -23.2% |
Balance Sheet
|
|---|
| Cash | 780 | 3,424 | 2,416 | 88,173 | 95,288 | 8.1% |
| Short Term Debt | 101 | 12,609 | 86,311 | 4,676 | 8,995 | 92.4% |
| Long Term Debt | 0 | 0 | 15,153 | 83,994 | 93,170 | 10.9% |
Cash flow
|
|---|
| Capex | 9,260 | 17,867 | 28,520 | 29,987 | 30,133 | 0.5% |
Ratios
|
|---|
| Revenue growth | 18.5% | 1.1% | -2.8% | -2.2% | -1.0% | |
| EBITDA growth | 15.5% | 3.3% | -16.2% | -0.4% | -4.2% | |
|
|---|
| EBITDA Margin | 42.7% | 43.7% | 37.6% | 38.3% | 37.1% | -1.2% |
| Net Income Margin | 34.9% | 36.0% | 30.9% | 27.5% | 21.4% | -6.2% |
| CAPEX, % of revenue | 9.4% | 17.9% | 29.4% | 31.6% | 32.1% | 0.5% |
|
|---|
| ROIC | 19.8% | 18.3% | 10.5% | 8.6% | 7.1% | -1.5% |
| ROE | 20.7% | 19.4% | 15.0% | 12.4% | 9.1% | -3.3% |
| Net Debt/EBITDA | -0.0x | 0.2x | 2.7x | 0.0x | 0.2x | 0.2x |
Peers in Exploration & Production
Below we provide Oil India benchmarking against other companies in Exploration & Production 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 |
|---|
| Aban Offshore ($ABAN) | - | 16.1% | 7.2% | 2.7% | -17.5% |
| Oil And Natural Gas Corporation ($ONGC) | - | 10.3% | 7.3% | -8.0% | -18.9% |
| Cairn India ($CAIRN) | - | 48.3% | 7.1% | -21.9% | -41.1% |
| |
|---|
| Median (3 companies) | 1.5% | 13.2% | 7.1% | -15.0% | -18.9% |
|---|
| Oil India ($OIL) | - | 1.1% | -2.8% | -2.2% | -1.0% |
Top companies by EBITDA margin, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Cairn India ($CAIRN) | 78.6% | 74.6% | 73.3% | 73.1% | 39.5% |
| Aban Offshore ($ABAN) | 59.7% | 55.4% | 57.0% | 58.9% | 56.7% |
| Selan Exploration Technology ($SELAN) | - | - | - | 44.3% | - |
| Oil And Natural Gas Corporation ($ONGC) | 33.9% | 27.3% | 28.4% | 26.7% | 32.0% |
| Shiv-Vani Oil & Gas Exploration Services ($SHIV-VANI) | 46.7% | 45.1% | - | -56.2% | - |
| |
|---|
| Median (5 companies) | 53.2% | 50.2% | 57.0% | 44.3% | 39.5% |
|---|
| Oil India ($OIL) | 42.7% | 43.7% | 37.6% | 38.3% | 37.1% |
Top companies by CAPEX/Revenue, %
| Top | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Aban Offshore ($ABAN) | 20.9% | 25.4% | 36.1% | 22.7% | 25.3% |
| Cairn India ($CAIRN) | 25.0% | 9.3% | 15.3% | 38.1% | 19.1% |
| Oil And Natural Gas Corporation ($ONGC) | 13.1% | 11.1% | 8.6% | 10.6% | 8.8% |
| |
|---|
| Median (3 companies) | 22.9% | 11.1% | 15.3% | 16.6% | 19.1% |
|---|
| Oil India ($OIL) | 9.4% | 17.9% | 29.4% | 31.6% | 32.1% |
Top companies by ROIC, %
| Top | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Oil And Natural Gas Corporation ($ONGC) | 25.2% | 18.6% | 15.8% | 10.2% | 9.0% |
| Aban Offshore ($ABAN) | 8.6% | 9.2% | 9.4% | 9.1% | 6.0% |
| Selan Exploration Technology ($SELAN) | 23.2% | 21.9% | 18.6% | 9.7% | 3.3% |
| Cairn India ($CAIRN) | 16.6% | 22.7% | 21.3% | 10.0% | 0.5% |
| |
|---|
| Median (4 companies) | 16.6% | 18.6% | 17.2% | 9.9% | 4.7% |
|---|
| Oil India ($OIL) | 19.8% | 18.3% | 10.5% | 8.6% | 7.1% |
Top companies by Net Debt / EBITDA
| Top | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Aban Offshore ($ABAN) | 7.1x | 6.6x | 6.5x | 5.9x | 7.6x |
| Oil And Natural Gas Corporation ($ONGC) | -0.2x | 0.0x | 0.5x | 1.1x | 1.1x |
| Cairn India ($CAIRN) | -0.3x | -0.0x | -0.0x | -0.0x | -0.4x |
| Selan Exploration Technology ($SELAN) | -1.7x | -0.2x | -2.2x | -3.2x | -7.2x |
| |
|---|
| Median (4 companies) | -0.2x | 0.0x | 0.3x | 0.5x | 0.3x |
|---|
| Oil India ($OIL) | -0.0x | 0.2x | 2.7x | 0.0x | 0.2x |
