Apl Apollo Tubes EBITDA surged on 56.6% and Revenue surged on 34.3%

30-05-2016 • About Apl Apollo Tubes ($APLAPOLLO) • By InTwits

Apl Apollo Tubes reported FY2016 financial results today. Here are the key drivers of the company's long term financial model:

Apl Apollo Tubes is a fast growth stock: FY2016 revenue growth was 34.3%, 5 year revenue CAGR was 36.1% at FY2016 ROIC 22.7%
Apl Apollo Tubes has low CAPEX intensity: 5 year average CAPEX/Revenue was 4.8%. At the same time it's in pair with industry average of 6.1%
CAPEX is quite volatile: ₹1,256m in FY2016, ₹1,839m in FY2015, ₹1,278m in FY2014, ₹849m in FY2013, ₹779m in FY2012
The company has highly profitable business model: ROIC is 22.7%
It operates with high leverage: Net Debt/EBITDA is 2.1x while industry average is 1.4x

Below you can find a comprehensive analysis of the key data driving the company's performance and the stock price.

Revenue and profitability

Apl Apollo Tubes's Revenue surged on 34.3%. During the last 5 years Revenue growth bottomed in FY2014 at 24.3% and was accelerating since that time. Having declining revenue the company managed to increase EBITDA margin. EBITDA Margin increased on 2.3 pp from 8.9% to 11.2% in FY2016. During the last 5 years EBITDA Margin bottomed in FY2015 at 5.9%.

Net Income margin showed almost no change in FY2016. During the last 5 years Net Income margin bottomed in FY2015 at 2.0%.

Investments (CAPEX, working capital and M&A)

Apl Apollo Tubes's CAPEX/Revenue was 3.0% in FY2016. CAPEX/Revenue decreased slightly on 1.2 pp from 4.2% in FY2013 to 3.0% in FY2016. It's average level of CAPEX/Revenue for the last three years was 4.7%.

Return on investment

The company operates at high and attractive ROIC (22.7%) while ROE is a bit lower (19.3%). ROIC increased on 6.1 pp from 16.6% to 22.7% in FY2016. ROE increased on 5.1 pp from 14.2% to 19.3% in FY2016.

Leverage (Debt)

Company's Net Debt / EBITDA is 2.1x and Debt / EBITDA is 2.1x. Net Debt / EBITDA dropped on 0.3x from 2.3x to 2.1x in FY2016. Debt jumped on 37.8% while cash dropped on 42.1%. During FY2012-FY2016 Net Debt/EBITDA topped in FY2014 at 3.1x and was declining since that time.

Apl Apollo Tubes has short term refinancing risk: cash is only 0.2% of short term debt.

Valuation and dividends

Apl Apollo Tubes's trades at EV/EBITDA 9.1x and P/E 20.4x while industy averages are 17.8x and 21.9x. The company's EV/(EBITDA-CAPEX) is 16.2x with the industry average at 22.8x.

Management team

The company's CEO Romi Sehgal has spent 5 years with the company. Deepak Goyal is a the company's CFO. Deepak Goyal has spent 5 years at the company.

Financial and operational results

Apl Apollo Tubes ($APLAPOLLO) key annual financial indicators

mln. INR	2012	2013	2014	2015	2016	2016/2015
P&L
Revenue	13,923	20,083	24,970	31,383	42,136	34.3%
SG&A	936	1,321
EBITDA	1,151	1,595	1,646	1,847	2,893	56.6%
Net Income	491	686	590	638	1,006	57.8%
Balance Sheet
Cash	20	23	19	18	10	-42.1%
Short Term Debt	2,387	3,606	3,676	2,926	4,109	40.5%
Long Term Debt	719	842	1,372	1,417	1,876	32.4%
Cash flow
Capex	779	849	1,278	1,839	1,256	-31.7%
Ratios
Revenue growth	54.5%	44.2%	24.3%	25.7%	34.3%
EBITDA growth	20.3%	38.6%	3.1%	12.2%	56.6%

EBITDA Margin	8.3%	7.9%	6.6%	5.9%	6.9%	1.0%
SG&A, % of revenue	6.7%	6.6%
Net Income Margin	3.5%	3.4%	2.4%	2.0%	2.4%	0.4%
CAPEX, % of revenue	5.6%	4.2%	5.1%	5.9%	3.0%	-2.9%

ROIC	18.2%	19.5%	16.0%	16.6%	22.7%	6.1%
ROE	18.3%	20.6%	14.9%	14.2%	19.3%	5.1%
Net Debt/EBITDA	2.7x	2.8x	3.1x	2.3x	2.1x	-0.3x

Peers in Iron & Steel Products

Below we provide Apl Apollo Tubes benchmarking against other companies in Iron & Steel Products 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 5	FY2012	FY2013	FY2014	FY2015	FY2016
Bedmutha Industries ($BEDMUTHA)	-	-7.4%	2.7%	44.6%	52.8%
Vallabh Steels ($VALLABHSQ)	-	-9.7%	-15.7%	-18.8%	15.8%
Electrotherm (India) ($ELECTHERM)	-	-	-	-	11.0%
Nile ($NILE)	-	-19.1%	6.9%	38.7%	10.2%
Usha Martin ($USHAMART)	-	7.8%	12.5%	12.0%	-9.1%
Median (9 companies)	20.4%	-7.4%	6.9%	7.9%	-9.1%
Apl Apollo Tubes ($APLAPOLLO)	-	44.2%	24.3%	25.7%	34.3%

Top companies by EBITDA margin, %


Top 5	FY2012	FY2013	FY2014	FY2015	FY2016
Gandhi Special Tubes ($GANDHITUBE)	-	-	-	25.5%	-
National Fittings ($NATFIT)	-	-	-	19.3%	-
Usha Martin ($USHAMART)	13.2%	18.1%	18.7%	16.5%	8.5%
Shree Steel Wire Ropes ($SSWRL)	-	-	-	12.5%	-
Lakshmi Precision Screws ($LAKPRE)	15.9%	16.2%	7.0%	12.4%	-
Median (14 companies)	5.5%	6.0%	7.0%	6.3%	4.1%
Apl Apollo Tubes ($APLAPOLLO)	8.3%	7.9%	6.6%	5.9%	6.9%

Top companies by CAPEX/Revenue, %


Top	FY2012	FY2013	FY2014	FY2015	FY2016
Usha Martin ($USHAMART)	21.6%	23.5%	29.0%	13.2%	9.2%
Gandhi Special Tubes ($GANDHITUBE)	-	-	-	4.0%	-
Median (2 companies)	6.2%	1.6%	22.2%	8.6%	9.2%
Apl Apollo Tubes ($APLAPOLLO)	5.6%	4.2%	5.1%	5.9%	3.0%

Top companies by ROIC, %


Top 5	FY2012	FY2013	FY2014	FY2015	FY2016
Lakshmi Precision Screws ($LAKPRE)	14.4%	11.9%	3.1%	11.9%	-
Gandhi Special Tubes ($GANDHITUBE)	28.3%	18.9%	13.2%	11.1%	13.3%
Usha Martin ($USHAMART)	4.3%	6.5%	7.6%	5.6%	0.7%
Gujarat Containers ($GUJCONT)	-	20.0%	-	-	-
Siddhartha Tubes ($SIDDHATUBE)	-	-	-	-	-
Median (24 companies)	8.5%	7.2%	5.9%	11.1%	7.0%
Apl Apollo Tubes ($APLAPOLLO)	18.2%	19.5%	16.0%	16.6%	22.7%

Top companies by Net Debt / EBITDA


Top 5	FY2012	FY2013	FY2014	FY2015	FY2016
Usha Martin ($USHAMART)	10.0x	4.8x	4.8x	5.2x	11.4x
Lakshmi Precision Screws ($LAKPRE)	2.7x	3.4x	8.1x	4.4x	-
Uni Abex Alloy Products ($UNIABEXAL)	0.0x	1.6x	0.0x	0.0x	-
National Fittings ($NATFIT)	0.8x	0.1x	0.0x	0.0x	0.0x
Remi Edelstahl Tubulars ($REMIEDEL)	5.5x	4.8x	-	0.0x	-
Median (12 companies)	2.6x	3.7x	0.0x	0.0x	0.0x
Apl Apollo Tubes ($APLAPOLLO)	2.7x	2.8x	3.1x	2.3x	2.1x

Apl Apollo Tubes stock price chart

Apl Apollo Tubes financials

mln.	FY2010	FY2011	FY2012

Revenue	38,124	9,010	13,923
EBITDA	600.6	956.6	1,151
Net income	297.8	430.9	490.6
CAPEX	559.1	790.5	779.0
Debt	1,573	2,473	3,106
Cash	30.773	43.280	20.220

About Apl Apollo Tubes

APL Apollo Tubes Limited manufactures and sells steel tubes and pipes in India. It offers MS black round tubes for liquid transmission, idlers, mechanical and engineering, structural, water and sewage, water well, fire protection, fencing, and other applications; galvanized iron tubes that are used in underground piping, overground piping, power, refineries, scaffolding, engineering structurals, scientific experiments, and fire-fighting systems; and pre-galvanized tubes for applications in fencing, cabling, ducting, automotive, and greenhouse structures. The company also provides hollow sections that are used in construction, machinery, automotive, furniture, storage system, and transmission tower applications; and API tubes, such as plain-end, threaded-end, and belled-end pipes, as well as through-the-flow line pipes for use in conveying gas, water, and oil and natural gas industries. In addition, it offers dynamically balanced tubes for use in engineering sector; idler tubes for conveyors; and propeller shafts and bobbin tubes for use in textile industry. The company also exports its products to approximately 35 countries. The company was formerly known as Bihar Tubes Limited and changed its name to APL Apollo Tubes Limited in 2010. APL Apollo Tubes Limited was founded in 1986 and is based in Ghaziabad, India.