Sarda Energy & Minerals CAPEX jumped on 71.0% while Revenue dropped on 15.6%
27-05-2016 • About Sarda Energy & Minerals (
$SARDAEN) • By InTwits
Sarda Energy & Minerals reported FY2016 financial results today. Overall the company's long term financial model is characterised by the following facts:
- Sarda Energy & Minerals has high CAPEX intensity: 5 year average CAPEX/Revenue was 19.1%. At the same time it's a lot of higher than industry average of 7.7%.
- CAPEX is quite volatile: ₹1,653m in FY2016, ₹967m in FY2015, ₹970m in FY2014, ₹3,344m in FY2013, ₹5,420m in FY2012
- The company has potentially unprofitable business model: ROIC is 4.7%
- It operates with high leverage: Net Debt/EBITDA is 5.8x while industry average is 4.0x
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 dropped on 15.6%. Revenue decline was accelerating on average at -9.4 pp per annum in the last 5 years. Revenue decline was worsened by EBITDA margin decline. EBITDA Margin decreased on 8.0 pp from 21.5% to 13.5% in FY2016.
Net Income margin decreased on 2.1 pp from 3.1% to 1.0% in FY2016. During FY2012-FY2016 Net Income margin topped in FY2013 at 11.6% and was declining since that time.
Investments (CAPEX, working capital and M&A)
In FY2016 the company had CAPEX/Revenue of 11.1%. Sarda Energy & Minerals showed big decline in CAPEX/Revenue of 13.0 pp from 24.1% in FY2013 to 11.1% in FY2016. Average CAPEX/Revenue for the last three years was 7.6%. Battling declining revenue the company invested a large share of EBITDA (82.7%) to CAPEX but that didn't help at least in this year. During the last 5 years CAPEX as a % of Revenue bottomed in FY2015 at 5.5%.
Return on investment
The company operates at low ROIC (4.7%) and ROE (1.3%). ROIC decreased on 5.0 pp from 9.7% to 4.7% in FY2016. ROE decreased on 3.4 pp from 4.7% to 1.3% in FY2016. During the last 5 years ROE topped in FY2013 at 16.5% and was declining since that time.
Leverage (Debt)
Company's Net Debt / EBITDA is 5.8x and Debt / EBITDA is 5.8x. Net Debt / EBITDA surged on 1.9x from 3.9x to 5.8x in FY2016. Debt dropped on 21.4% while cash surged on 10.5%.
Sarda Energy & Minerals has short term refinancing risk: cash is only 4.3% of short term debt.
Valuation and dividends
The company's trades at EV/EBITDA 7.6x and P/E 23.6x while industy averages are 17.8x and 21.9x. Sarda Energy & Minerals's EV/(EBITDA-CAPEX) is 43.7x with the industry average at 22.8x.
Financial and operational results
Sarda Energy & Minerals ($SARDAEN) key annual financial indicators| mln. INR | 2012 | 2013 | 2014 | 2015 | 2016 | 2016/2015 |
|---|
P&L
|
|---|
| Revenue | 11,082 | 13,871 | 15,914 | 17,599 | 14,859 | -15.6% |
| EBITDA | 1,811 | 2,977 | 3,388 | 3,778 | 2,000 | -47.1% |
| Net Income | 871 | 1,615 | 910 | 549 | 154 | -72.0% |
Balance Sheet
|
|---|
| Cash | 793 | 700 | 1,023 | 108 | 119 | 10.5% |
| Short Term Debt | 3,238 | 5,145 | 8,530 | 6,609 | 2,769 | -58.1% |
| Long Term Debt | 8,059 | 9,125 | 8,836 | 8,212 | 8,881 | 8.1% |
Cash flow
|
|---|
| Capex | 5,420 | 3,344 | 970 | 967 | 1,653 | 71.0% |
Ratios
|
|---|
| Revenue growth | 24.4% | 25.2% | 14.7% | 10.6% | -15.6% | |
| EBITDA growth | 33.8% | 64.4% | 13.8% | 11.5% | -47.1% | |
|
|---|
| EBITDA Margin | 16.3% | 21.5% | 21.3% | 21.5% | 13.5% | -8.0% |
| Net Income Margin | 7.9% | 11.6% | 5.7% | 3.1% | 1.0% | -2.1% |
| CAPEX, % of revenue | 48.9% | 24.1% | 6.1% | 5.5% | 11.1% | 5.6% |
|
|---|
| ROIC | 6.1% | 9.7% | 8.7% | 9.7% | 4.7% | -5.0% |
| ROE | 10.2% | 16.5% | 8.3% | 4.7% | 1.3% | -3.4% |
| Net Debt/EBITDA | 5.8x | 4.6x | 4.8x | 3.9x | 5.8x | 1.9x |
Peers in Iron & Steel/Interm.Products
Below you can find Sarda Energy & Minerals benchmarking vs. other companies in Iron & Steel/Interm.Products 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 |
|---|
| Ocl Iron And Steel ($OISL) | - | 5.5% | 86.6% | 69.1% | -65.1% |
| Uttam Galva Steels ($UTTAMSTL) | 12.0% | 11.0% | -13.2% | 55.0% | - |
| Modern Steels ($MDRNSTL) | -2.6% | -22.7% | 0.7% | 20.3% | - |
| Maithan Alloys ($MAITHANALL) | - | 59.1% | 1.1% | 15.0% | 4.0% |
| Pennar Industries ($PENIND) | - | -8.5% | 0.5% | 12.7% | 3.4% |
| |
|---|
| Median (34 companies) | 11.9% | 5.5% | 3.4% | -1.6% | -13.1% |
|---|
| Sarda Energy & Minerals ($SARDAEN) | - | 25.2% | 14.7% | 10.6% | -15.6% |
Top companies by EBITDA margin, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Jindal Steel & Power ($JINDALSTEL) | 37.5% | 30.5% | 28.1% | 29.8% | 17.2% |
| Bhushan Steel ($BHUSANSTL) | 31.2% | 32.3% | 28.1% | 20.4% | - |
| Jsw Steel ($JSWSTEEL) | 17.8% | 17.1% | 17.9% | 17.7% | 14.6% |
| Tata Metaliks ($TATAMETALI) | -9.6% | 0.9% | 6.8% | 14.6% | 16.8% |
| Jai Corp ($JAICORPLTD) | 14.1% | 16.3% | 16.0% | 12.7% | 15.8% |
| |
|---|
| Median (31 companies) | 9.3% | 9.0% | 7.0% | 7.2% | 9.2% |
|---|
| Sarda Energy & Minerals ($SARDAEN) | 16.3% | 21.5% | 21.3% | 21.5% | 13.5% |
Top companies by CAPEX/Revenue, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Ocl Iron And Steel ($OISL) | 191.2% | 247.2% | 163.7% | 42.4% | - |
| Jindal Steel & Power ($JINDALSTEL) | 34.2% | 47.6% | 69.6% | 26.4% | 21.8% |
| Jayaswal Neco Industries ($JAYNECOIND) | 20.4% | 44.0% | 31.1% | 17.3% | 5.7% |
| Steel Authority Of India ($SAIL) | 20.9% | 20.7% | 19.3% | 16.9% | 17.3% |
| Bhushan Steel ($BHUSANSTL) | 47.2% | 44.0% | 50.4% | 16.2% | - |
| |
|---|
| Median (18 companies) | 9.7% | 11.6% | 9.2% | 4.9% | 7.0% |
|---|
| Sarda Energy & Minerals ($SARDAEN) | 48.9% | 24.1% | 6.1% | 5.5% | 11.1% |
Top companies by ROIC, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Tata Metaliks ($TATAMETALI) | -23.5% | -3.7% | 19.9% | 57.4% | 42.6% |
| Pennar Industries ($PENIND) | 26.8% | 18.4% | 12.3% | 15.7% | 16.6% |
| Maithan Alloys ($MAITHANALL) | 16.3% | 15.1% | 5.5% | 15.3% | 19.0% |
| Kirloskar Ferrous Industries ($KIRLFER) | 19.1% | 16.8% | 12.4% | 14.7% | 15.9% |
| Gallantt Metal ($GALLANTT) | 8.7% | 11.7% | 8.5% | 11.7% | - |
| |
|---|
| Median (42 companies) | 7.2% | 5.4% | 5.5% | 4.5% | 2.9% |
|---|
| Sarda Energy & Minerals ($SARDAEN) | 6.1% | 9.7% | 8.7% | 9.7% | 4.7% |
Top companies by Net Debt / EBITDA
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Visa Steel ($VISASTEEL) | 20.1x | - | 24.4x | 187.1x | - |
| Ismt ($ISMTLTD) | 5.3x | 9.8x | 19.9x | 48.3x | 0.0x |
| Kic Metaliks ($KAJARIR) | 9.2x | 3.0x | 18.2x | 19.8x | - |
| Ocl Iron And Steel ($OISL) | 164.7x | 1,935.8x | 41.6x | 19.4x | - |
| Bhushan Steel ($BHUSANSTL) | 6.3x | 8.6x | 12.9x | 17.7x | - |
| |
|---|
| Median (28 companies) | 4.6x | 4.4x | 3.4x | 1.7x | 0.8x |
|---|
| Sarda Energy & Minerals ($SARDAEN) | 5.8x | 4.6x | 4.8x | 3.9x | 5.8x |
