Hindalco Industries revenue decreased on 3.9% and EBITDA Margin showed almost no change
28-05-2016 • About Hindalco Industries (
$HINDALCO) • By InTwits
Hindalco Industries reported FY2016 financial results today. Here are the key drivers of the company's long term financial model:
- Hindalco Industries has high CAPEX intensity: 5 year average CAPEX/Revenue was 10.2%. At the same time it's a lot of higher than industry average of 5.9%.
- CAPEX is quite volatile: ₹39,891m in FY2016, ₹59,776m in FY2015, ₹94,236m in FY2014, ₹118,710m in FY2013, ₹125,119m in FY2012
- The company has potentially unprofitable business model: ROIC is 4.1%
- It operates with high leverage: Net Debt/EBITDA is 7.3x while industry average is 1.9x
Below you can find a comprehensive analysis of the key data driving the company's performance and the stock price.
Revenue and profitability
Hindalco Industries's Revenue decreased on 3.9%. EBITDA Margin showed almost no change in FY2016. EBITDA Margin stuck to a declining trend at -0.61 pp per annum in FY2012-FY2016.
Net Income margin decreased slightly on 0.78 pp from 0.83% to 0.045% in FY2016. Net Income margin stuck to a declining trend at -1.1 pp per annum in FY2012-FY2016.
Investments (CAPEX, working capital and M&A)
The company's CAPEX/Revenue was 4.0% in FY2016. The company showed big decline in CAPEX/Revenue of 10.8 pp from 14.8% in FY2013 to 4.0% in FY2016. For the last three years the average CAPEX/Revenue was 6.9%. CAPEX as a % of Revenue followed a declining trend at -3.2 pp per annum in FY2012-FY2016.
Return on investment
The company operates at low ROIC (4.1%) and ROE (0.1%). ROIC decreased slightly on 0.82 pp from 4.9% to 4.1% in FY2016. ROE decreased on 2.0 pp from 2.2% to 0.12% in FY2016. ROIC followed a declining trend at -1.0 pp per annum in the last 5 years. ROE declined at -2.9 pp per annum in the last 5 years.
Leverage (Debt)
Company's Net Debt / EBITDA is 7.3x and Debt / EBITDA is 7.8x. Net Debt / EBITDA surged on 0.2x from 7.2x to 7.3x in FY2016. Debt decreased slightly on 1.4% while cash decreased on 3.9%.
Hindalco Industries has short term refinancing risk: cash is only 45.0% of short term debt.
Management team
The company's CFO Praveen Kumar Maheshwari has spent 4 years with the company.
Financial and operational results
Hindalco Industries ($HINDALCO) key annual financial indicators| mln. INR | 2012 | 2013 | 2014 | 2015 | 2016 | 2016/2015 |
|---|
P&L
|
|---|
| Revenue | 809,286 | 801,363 | 873,186 | 1,034,060 | 993,619 | -3.9% |
| EBITDA | 88,416 | 82,855 | 81,545 | 89,568 | 86,368 | -3.6% |
| Net Income | 33,970 | 30,269 | 21,750 | 8,542 | 448 | -94.8% |
Balance Sheet
|
|---|
| Cash | 27,397 | 21,894 | 35,401 | 43,727 | 42,015 | -3.9% |
| Short Term Debt | 39,147 | 70,943 | 108,117 | 130,814 | 93,415 | -28.6% |
| Long Term Debt | 371,272 | 498,569 | 539,441 | 553,862 | 581,762 | 5.0% |
Cash flow
|
|---|
| Capex | 125,119 | 118,710 | 94,236 | 59,776 | 39,891 | -33.3% |
Ratios
|
|---|
| Revenue growth | 12.7% | -1.0% | 9.0% | 18.4% | -3.9% | |
| EBITDA growth | 11.8% | -6.3% | -1.6% | 9.8% | -3.6% | |
|
|---|
| EBITDA Margin | 10.9% | 10.3% | 9.3% | 8.7% | 8.7% | 0.0% |
| Net Income Margin | 4.2% | 3.8% | 2.5% | 0.8% | 0.0% | -0.8% |
| CAPEX, % of revenue | 15.5% | 14.8% | 10.8% | 5.8% | 4.0% | -1.8% |
|
|---|
| ROIC | 8.6% | 6.2% | 4.6% | 4.9% | 4.1% | -0.8% |
| ROE | 11.1% | 9.0% | 5.7% | 2.2% | 0.1% | -2.0% |
| Net Debt/EBITDA | 4.3x | 6.6x | 7.5x | 7.2x | 7.3x | 0.2x |
Peers in Aluminium
Below you can find Hindalco Industries benchmarking vs. other companies in Aluminium 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 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Alicon Castalloy ($ALICON) | - | 11.9% | 1.5% | 34.0% | 5.0% |
| Pg Foils ($PGFOILQ) | 36.1% | -4.3% | 2.6% | 21.9% | - |
| Bothra Metals & Alloys ($BMAL) | 12.1% | 57.0% | 27.3% | 15.3% | - |
| Gujarat Foils ($GUJFOIL) | - | 31.4% | 25.2% | 13.2% | -7.3% |
| |
|---|
| Median (4 companies) | 24.1% | 21.7% | 13.9% | 18.6% | -1.2% |
|---|
| Hindalco Industries ($HINDALCO) | - | -1.0% | 9.0% | 18.4% | -3.9% |
Top companies by EBITDA margin, %
| Top | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Alicon Castalloy ($ALICON) | 9.8% | 8.8% | 10.0% | 9.9% | 10.4% |
| Tentiwal Wire Products ($TWPL) | - | - | - | 9.7% | - |
| Bothra Metals & Alloys ($BMAL) | 6.5% | 5.1% | 3.6% | 4.3% | - |
| |
|---|
| Median (3 companies) | 6.5% | 7.0% | 6.8% | 9.7% | 10.4% |
|---|
| Hindalco Industries ($HINDALCO) | 10.9% | 10.3% | 9.3% | 8.7% | 8.7% |
Top companies by CAPEX/Revenue, %
| Top | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Alicon Castalloy ($ALICON) | 8.4% | 3.7% | 5.2% | 12.0% | 7.8% |
| |
|---|
| Median (1 company) | 5.2% | 3.7% | 5.2% | 12.0% | 7.8% |
|---|
| Hindalco Industries ($HINDALCO) | 15.5% | 14.8% | 10.8% | 5.8% | 4.0% |
Top companies by ROIC, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Alicon Castalloy ($ALICON) | 16.4% | 13.0% | 14.8% | 16.7% | 16.3% |
| Tentiwal Wire Products ($TWPL) | 12.5% | 12.6% | - | - | - |
| Sacheta Metals ($SACHEMT) | -3.1% | - | - | - | - |
| Bothra Metals & Alloys ($BMAL) | 15.2% | 13.8% | - | - | - |
| Gujarat Foils ($GUJFOIL) | - | - | - | - | - |
| |
|---|
| Median (6 companies) | 12.5% | 12.8% | 14.8% | 16.7% | 16.3% |
|---|
| Hindalco Industries ($HINDALCO) | 8.6% | 6.2% | 4.6% | 4.9% | 4.1% |
Top companies by Net Debt / EBITDA
| Top | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Alicon Castalloy ($ALICON) | 2.3x | 2.1x | 2.0x | 2.3x | 2.0x |
| Tentiwal Wire Products ($TWPL) | 4.9x | 5.2x | 0.0x | 0.0x | - |
| Bothra Metals & Alloys ($BMAL) | 4.1x | 3.1x | 0.0x | 0.0x | - |
| |
|---|
| Median (3 companies) | 4.9x | 3.4x | 0.0x | 0.0x | 1.0x |
|---|
| Hindalco Industries ($HINDALCO) | 4.3x | 6.6x | 7.5x | 7.2x | 7.3x |
