J.K.Cement CAPEX dropped on 37.0% while Revenue surged on 10.9%
28-05-2016 • About J.K.Cement (
$JKCEMENT) • By InTwits
J.K.Cement reported FY2016 financial results today. Overall the company's long term financial model is characterised by the following facts:
- J.K.Cement is a growth stock: FY2016 revenue growth was 10.9%, 5 year revenue CAGR was 12.5% at FY2016 ROIC 6.9%
- J.K.Cement has high CAPEX intensity: 5 year average CAPEX/Revenue was 21.3%. At the same time it's a lot of higher than industry average of 7.7%.
- CAPEX is quite volatile: ₹3,465m in FY2016, ₹5,502m in FY2015, ₹15,595m in FY2014, ₹5,464m in FY2013, ₹1,662m in FY2012
- The company has potentially unprofitable business model: ROIC is 6.9%
- It operates with high leverage: Net Debt/EBITDA is 5.2x while industry average is 24.6x
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 jumped on 10.9%. Revenue growth happened at the same time with EBITDA margin expansion. EBITDA Margin increased slightly on 1.2 pp from 13.4% to 14.5% in FY2016. During FY2012-FY2016 EBITDA Margin bottomed in FY2014 at 12.7% and was growing since that time.
SG&A as a % of Revenue showed almost no change in FY2016.
Net Income margin decreased on 2.6 pp from 4.2% to 1.7% in FY2016.
Investments (CAPEX, working capital and M&A)
In FY2016 the company had CAPEX/Revenue of 9.2%. CAPEX/Revenue decreased on 9.5 pp from 18.8% in FY2013 to 9.2% in FY2016. It's average level of CAPEX/Revenue for the last three years was 27.1%. J.K.Cement invested a big chunk of EBITDA (63.5%) to CAPEX to secure its growth. During the last 5 years CAPEX as a % of Revenue topped in FY2014 at 55.8% and was declining since that time.
Return on investment
The company operates at low ROIC (6.9%) and ROE (3.9%). ROIC increased slightly on 0.66 pp from 6.3% to 6.9% in FY2016. ROE decreased on 4.6 pp from 8.5% to 3.9% in FY2016.
Leverage (Debt)
Debt level is 5.2x Net Debt / EBITDA and 6.1x Debt / EBITDA. Net Debt / EBITDA dropped on 0.6x from 5.8x to 5.2x in FY2016. Debt increased on 9.9% while cash jumped on 21.1%.
J.K.Cement has no short term refinancing risk: cash is higher than short term debt (105.9%).
Financial and operational results
J.K.Cement ($JKCEMENT) key annual financial indicators| mln. INR | 2012 | 2013 | 2014 | 2015 | 2016 | 2016/2015 |
|---|
P&L
|
|---|
| Revenue | 25,378 | 29,120 | 27,958 | 33,874 | 37,557 | 10.9% |
| SG&A | | | | 1,385 | 1,497 | 8.2% |
| EBITDA | 5,163 | 5,594 | 3,542 | 4,528 | 5,453 | 20.4% |
| Net Income | 1,746 | 2,308 | 772 | 1,436 | 634 | -55.9% |
Balance Sheet
|
|---|
| Cash | 685 | 927 | 3,279 | 3,959 | 4,796 | 21.1% |
| Short Term Debt | 2,633 | 3,186 | 3,416 | 3,007 | 4,529 | 50.6% |
| Long Term Debt | 9,967 | 10,595 | 24,415 | 27,301 | 28,767 | 5.4% |
Cash flow
|
|---|
| Capex | 1,662 | 5,464 | 15,595 | 5,502 | 3,465 | -37.0% |
Ratios
|
|---|
| Revenue growth | 21.8% | 14.7% | -4.0% | 21.2% | 10.9% | |
| EBITDA growth | 86.0% | 8.4% | -36.7% | 27.8% | 20.4% | |
|
|---|
| EBITDA Margin | 20.3% | 19.2% | 12.7% | 13.4% | 14.5% | 1.2% |
| SG&A, % of revenue | | | | 4.1% | 4.0% | -0.1% |
| Net Income Margin | 6.9% | 7.9% | 2.8% | 4.2% | 1.7% | -2.6% |
| CAPEX, % of revenue | 6.5% | 18.8% | 55.8% | 16.2% | 9.2% | -7.0% |
|
|---|
| ROIC | 13.2% | 13.6% | 5.4% | 6.3% | 6.9% | 0.7% |
| ROE | 12.0% | 14.4% | 4.5% | 8.5% | 3.9% | -4.6% |
| Net Debt/EBITDA | 2.3x | 2.3x | 6.9x | 5.8x | 5.2x | -0.6x |
Peers in Cement & Cement Products
Below you can find J.K.Cement benchmarking vs. other companies in Cement & Cement 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 |
|---|
| Ncl Industries ($NCLIND) | 38.2% | -15.8% | -3.0% | 30.8% | - |
| Indian Hume Pipe Co ($INDIANHUME) | - | 34.5% | 18.3% | 22.7% | -7.2% |
| Visaka Industries ($VIKASAS) | - | 22.0% | -2.6% | 13.6% | -0.8% |
| Prism Cement ($PRISMCEM) | - | 4.9% | 5.3% | 12.5% | -0.6% |
| K.C.P ($KCP) | - | 11.7% | -8.2% | 12.4% | 9.2% |
| |
|---|
| Median (16 companies) | 14.6% | 11.4% | 1.8% | 6.2% | -0.7% |
|---|
| J.K.Cement ($JKCEMENT) | - | 14.7% | -4.0% | 21.2% | 10.9% |
Top companies by EBITDA margin, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Deccan Cements ($DECCANCE) | 22.8% | 13.2% | 14.7% | 14.9% | 19.9% |
| K.C.P ($KCP) | 19.2% | 9.4% | 11.7% | 13.0% | 18.1% |
| India Cements ($INDIACEM) | 20.6% | 18.4% | 12.4% | 15.1% | 17.8% |
| Heidelbergcement India ($HEIDELBERG) | 8.3% | 9.3% | 15.9% | 7.4% | 15.3% |
| Saurashtra Cement ($SAURASHCEM) | 11.4% | 21.6% | 11.9% | 16.8% | 13.8% |
| |
|---|
| Median (12 companies) | 16.2% | 13.4% | 11.7% | 11.0% | 12.7% |
|---|
| J.K.Cement ($JKCEMENT) | 20.3% | 19.2% | 12.7% | 13.4% | 14.5% |
Top companies by CAPEX/Revenue, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Orient Cement ($ORIENTCEM) | - | 2.9% | - | 59.7% | 24.5% |
| K.C.P ($KCP) | 8.6% | 9.9% | 12.6% | 5.2% | 19.8% |
| Heidelbergcement India ($HEIDELBERG) | 51.5% | 19.2% | - | - | 7.6% |
| Birla Corporation ($BIRLACORPN) | 19.1% | 7.1% | 5.5% | 6.9% | 5.1% |
| Saurashtra Cement ($SAURASHCEM) | 1.4% | 2.0% | 1.5% | 2.9% | 4.8% |
| |
|---|
| Median (10 companies) | 5.5% | 7.1% | 5.5% | 5.1% | 4.2% |
|---|
| J.K.Cement ($JKCEMENT) | 6.5% | 18.8% | 55.8% | 16.2% | 9.2% |
Top companies by ROIC, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Saurashtra Cement ($SAURASHCEM) | 38.6% | 42.7% | 13.9% | 26.9% | 23.6% |
| Indian Hume Pipe Co ($INDIANHUME) | 7.6% | 13.8% | 15.0% | 18.0% | 14.5% |
| Orient Cement ($ORIENTCEM) | - | 57.3% | 15.2% | 15.4% | 4.6% |
| Acc ($ACC) | 20.2% | 12.7% | 11.0% | 9.9% | - |
| K.C.P ($KCP) | 17.6% | 6.7% | 7.1% | 9.3% | 15.0% |
| |
|---|
| Median (17 companies) | 15.8% | 8.3% | 6.7% | 8.7% | 8.4% |
|---|
| J.K.Cement ($JKCEMENT) | 13.2% | 13.6% | 5.4% | 6.3% | 6.9% |
Top companies by Net Debt / EBITDA
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Udaipur Cement Works ($UDAICEMENT) | - | - | - | 17.1x | 358.6x |
| Orient Cement ($ORIENTCEM) | - | -0.1x | 1.1x | 3.5x | 6.8x |
| Prism Cement ($PRISMCEM) | 4.8x | 6.0x | 10.0x | 6.0x | 5.3x |
| India Cements ($INDIACEM) | 3.2x | 3.5x | 5.5x | 4.6x | 3.7x |
| Birla Corporation ($BIRLACORPN) | 3.1x | 2.9x | 3.2x | 2.7x | 3.3x |
| |
|---|
| Median (12 companies) | 1.8x | 2.8x | 2.6x | 2.6x | 3.1x |
|---|
| J.K.Cement ($JKCEMENT) | 2.3x | 2.3x | 6.9x | 5.8x | 5.2x |
