Rural Electrification Corporation revenue surged on 15.6% while EBITDA Margin decreased slightly on 1.3 pp from 93.3% to 92.0%
27-05-2016 • About Rural Electrification Corporation (
$RECLTD) • By InTwits
Rural Electrification Corporation reported FY2016 financial results today. Overall the company's long term financial model is characterised by the following facts:
- Rural Electrification Corporation is a fast growth stock: FY2016 revenue growth was 15.6%, 5 year revenue CAGR was 22.4% at FY2016 ROIC 4.3%
- EBITDA Margin is declining: 92.0% in FY2016 vs. 93.3% in FY2015 vs. 97.2% in FY2012
- Rural Electrification Corporation has low CAPEX intensity: 5 year average CAPEX/Revenue was 0.3%.
- The company has potentially unprofitable business model: ROIC is 4.3%
- It operates with high leverage: Net Debt/EBITDA is 7.8x while industry average is 2.6x
Below you can find a comprehensive analysis of the key data driving the company's performance and the stock price.
Revenue and profitability
Rural Electrification Corporation's Revenue surged on 15.6%. During FY2012-FY2016 Revenue growth topped in FY2013 at 29.9% and was decelerating since that time. Revenue growth was financed by EBITDA margin decline. EBITDA Margin decreased slightly on 1.3 pp from 93.3% to 92.0% in FY2016. EBITDA Margin declined at -1.5 pp per annum in the last 5 years.
Net Income margin decreased on 2.1 pp from 26.3% to 24.3% in FY2016. During the last 5 years Net Income margin topped in FY2013 at 28.1% and was declining since that time.
Investments (CAPEX, working capital and M&A)
In FY2016 Rural Electrification Corporation had CAPEX/Revenue of 1.1%. Rural Electrification Corporation's CAPEX/Revenue increased slightly on 1.1 pp from 0.039% in FY2013 to 1.1% in FY2016. Average CAPEX/Revenue for the last three years was 0.45%. During the last 5 years CAPEX as a % of Revenue bottomed in FY2014 at 0.028% and was growing since that time.
Return on investment
The company operates at good ROE (21.1%) while ROIC is low (4.3%). ROIC showed almost no change in FY2016. ROE decreased on 2.2 pp from 23.3% to 21.1% in FY2016. During the last 5 years ROE topped in FY2014 at 24.7% and was declining since that time.
Leverage (Debt)
Company's Net Debt / EBITDA is 7.8x and Debt / EBITDA is 7.8x. Net Debt / EBITDA dropped on 0.2x from 8.0x to 7.8x in FY2016. Debt surged on 11.9% while cash jumped on 189%.
Rural Electrification Corporation has short term refinancing risk: cash is only 6.1% of short term debt.
Valuation and dividends
The company's trades at EV/EBITDA 8.5x and P/E 2.7x while industy averages are 17.8x and 21.9x.
Financial and operational results
Rural Electrification Corporation ($RECLTD) key annual financial indicators| mln. INR | 2012 | 2013 | 2014 | 2015 | 2016 | 2016/2015 |
|---|
P&L
|
|---|
| Revenue | 105,128 | 136,576 | 172,436 | 202,945 | 234,566 | 15.6% |
| EBITDA | 102,202 | 132,928 | 166,713 | 189,324 | 215,738 | 14.0% |
| Net Income | 28,387 | 38,328 | 47,413 | 53,444 | 56,914 | 6.5% |
Balance Sheet
|
|---|
| Cash | 53,754 | 15,295 | 12,343 | 6,457 | 18,641 | 188.7% |
| Short Term Debt | 135,045 | 168,363 | 160,779 | 201,787 | 305,030 | 51.2% |
| Long Term Debt | 765,537 | 909,254 | 1,100,953 | 1,311,233 | 1,387,844 | 5.8% |
Cash flow
|
|---|
| Capex | 139 | 53 | 48 | 453 | 2,594 | 472.1% |
Ratios
|
|---|
| Revenue growth | 23.2% | 29.9% | 26.3% | 17.7% | 15.6% | |
| EBITDA growth | 23.3% | 30.1% | 25.4% | 13.6% | 14.0% | |
|
|---|
| EBITDA Margin | 97.2% | 97.3% | 96.7% | 93.3% | 92.0% | -1.3% |
| Net Income Margin | 27.0% | 28.1% | 27.5% | 26.3% | 24.3% | -2.1% |
| CAPEX, % of revenue | 0.1% | 0.0% | 0.0% | 0.2% | 1.1% | 0.9% |
|
|---|
| ROIC | | 4.7% | 5.2% | 4.7% | 4.3% | -0.3% |
| ROE | 20.7% | 23.8% | 24.7% | 23.3% | 21.1% | -2.2% |
| Net Debt/EBITDA | 8.3x | 8.0x | 7.5x | 8.0x | 7.8x | -0.2x |
Peers in Finance (including NBFCs)
Below you can find Rural Electrification Corporation benchmarking vs. other companies in Finance (including NBFCs) 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 |
|---|
| Sks Microfinance ($SKSMICRO) | - | -25.6% | 55.0% | 47.3% | 64.5% |
| Motilal Oswal Financial Services ($MOTILALOFS) | - | 0.4% | -0.9% | 64.7% | 39.8% |
| K.Z.Leasing & Finance ($KZLFIN) | - | 41.6% | - | - | 26.5% |
| Bajaj Finserv ($BAJAJFINSV) | - | 28.1% | 18.8% | 26.8% | 23.9% |
| Muthoot Capital Services ($MUTHTFN) | - | 59.3% | 48.1% | 20.5% | 19.5% |
| |
|---|
| Median (20 companies) | 24.9% | 24.4% | 19.8% | 13.3% | 8.2% |
|---|
| Rural Electrification Corporation ($RECLTD) | - | 29.9% | 26.3% | 17.7% | 15.6% |
Top companies by EBITDA margin, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Microse India ($MICROSE) | - | - | - | 101.1% | - |
| Pnb Gilts ($PNBGILTS) | 94.0% | 96.4% | 96.4% | 96.1% | 95.4% |
| Jsw Holdings ($JSWHL) | - | - | - | 93.8% | - |
| Bajaj Holdings & Investment ($BAJAJHLDNG) | 96.1% | 95.4% | 92.3% | 92.7% | 91.4% |
| Saraswati Commercial (India) ($ZSARACOM) | - | - | - | 92.3% | - |
| |
|---|
| Median (49 companies) | 64.8% | 65.4% | 65.5% | 53.8% | 62.7% |
|---|
| Rural Electrification Corporation ($RECLTD) | 97.2% | 97.3% | 96.7% | 93.3% | 92.0% |
Top companies by CAPEX/Revenue, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Fortune Financial Services (India) ($FORTUNEF) | 1.0% | 1.3% | 4.5% | 7.3% | 0.9% |
| Clarus Finance & Securities ($CLARUS) | - | - | 6.9% | 5.8% | - |
| Srei Infrastructure Finance ($SREINFRA) | 30.2% | 8.5% | 12.3% | 5.4% | - |
| Motilal Oswal Financial Services ($MOTILALOFS) | 15.5% | 5.3% | 1.7% | 3.4% | 2.5% |
| Bengal & Assam Company ($BENGALASM) | 15.9% | 4.5% | 1.2% | 2.1% | - |
| |
|---|
| Median (21 companies) | 1.0% | 0.8% | 1.1% | 0.7% | 0.8% |
|---|
| Rural Electrification Corporation ($RECLTD) | 0.1% | 0.0% | 0.0% | 0.2% | 1.1% |
Top companies by ROIC, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Motilal Oswal Financial Services ($MOTILALOFS) | - | 12.0% | 9.7% | 11.9% | 7.8% |
| Sks Microfinance ($SKSMICRO) | - | - | 4.1% | 6.6% | 7.6% |
| Shriram City Union Finance ($SHRIRAMCIT) | 6.1% | 5.8% | 5.8% | 5.7% | 4.6% |
| Mahindra & Mahindra Financial Services ($M&MFIN) | 6.4% | 6.3% | 5.3% | 4.2% | 3.2% |
| Bajaj Holdings & Investment ($BAJAJHLDNG) | 3.6% | 3.4% | 3.5% | 3.9% | 3.0% |
| |
|---|
| Median (54 companies) | 4.1% | 4.4% | 3.8% | 3.9% | 3.7% |
|---|
| Rural Electrification Corporation ($RECLTD) | - | 4.7% | 5.2% | 4.7% | 4.3% |
Top companies by Net Debt / EBITDA
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Fortune Financial Services (India) ($FORTUNEF) | 9.0x | - | 10.8x | 8.9x | -0.5x |
| Pnb Gilts ($PNBGILTS) | 14.2x | 11.2x | 11.3x | 8.8x | 15.0x |
| Srei Infrastructure Finance ($SREINFRA) | 7.0x | 6.2x | 7.5x | 8.0x | - |
| Magma Fincorp ($MAGMA) | 7.7x | 8.5x | 7.0x | 7.7x | 7.5x |
| Cholamandalam Investment And Finance Company ($CHOLAFIN) | 9.0x | 7.9x | 7.4x | 7.2x | 4.9x |
| |
|---|
| Median (45 companies) | 4.7x | 3.6x | 2.9x | 0.0x | 2.0x |
|---|
| Rural Electrification Corporation ($RECLTD) | 8.3x | 8.0x | 7.5x | 8.0x | 7.8x |
