Bhushan Steel reports 56.1% CAPEX decline in 2016 while 10.9% Revenue growth
30-05-2016 • About Bhushan Steel (
$BHUSANSTL) • By InTwits
Bhushan Steel reported FY2016 financial results today. Overall the company's long term financial model is characterised by the following facts:
- Bhushan Steel is a growth stock: FY2016 revenue growth was 10.9%, 5 year revenue CAGR was 11.0% at FY2016 ROIC 2.0%
- EBITDA Margin is declining: 17.7% in FY2016 vs. 20.4% in FY2015 vs. 31.2% in FY2012
- Bhushan Steel has high CAPEX intensity: 5 year average CAPEX/Revenue was 32.8%. At the same time it's a lot of higher than industry average of 7.1%.
- CAPEX is quite volatile: ₹7,559m in FY2016, ₹17,204m in FY2015, ₹48,763m in FY2014, ₹45,276m in FY2013, ₹47,037m in FY2012
- The company has potentially unprofitable business model: ROIC is 2.0%
- It operates with high leverage: Net Debt/EBITDA is 20.7x while industry average is 3.7x
Below you can find a comprehensive analysis of the key data driving the company's performance and the stock price.
Revenue and profitability
Bhushan Steel's Revenue jumped on 10.9%. During FY2012-FY2016 Revenue growth bottomed in FY2014 at -5.9% and was accelerating since that time. Despite revenue decline the EBITDA margin expanded. EBITDA Margin increased slightly on 1.6 pp from 15.2% to 16.8% in FY2016. EBITDA Margin declined at -3.9 pp per annum in FY2012-FY2016.
Net Income margin dropped on 12.9 pp from -11.8% to -24.7% in FY2016. Net Income margin stuck to a declining trend at -9.0 pp per annum in FY2012-FY2016.
Investments (CAPEX, working capital and M&A)
The company's CAPEX/Revenue was 6.4% in FY2016. CAPEX/Revenue dropped on 37.6 pp from 44.0% in FY2013 to 6.4% in FY2016. For the last three years the average CAPEX/Revenue was 24.3%.
Return on investment
The company operates at low but positive ROIC (2.0%) and negative ROE (-47.9%). ROIC decreased slightly on 0.59 pp from 2.6% to 2.0% in FY2016. ROE dropped on 32.8 pp from -15.1% to -47.9% in FY2016. ROIC followed a declining trend at -2.0 pp per annum in the last 5 years. ROE stuck to a declining trend at -15.2 pp per annum in FY2012-FY2016.
Leverage (Debt)
Debt level is 20.7x Net Debt / EBITDA and 20.8x Debt / EBITDA. Net Debt / EBITDA jumped on 3.1x from 17.7x to 20.7x in FY2016. Debt surged on 12.7% while cash jumped on 85.8%. Net Debt/EBITDA followed a growing trend at 3.8x per annum in FY2012-FY2016.
Bhushan Steel has short term refinancing risk: cash is only 1.5% of short term debt.
Management team
The company's CFO Nittin Johari has spent 13 years with the company.
Financial and operational results
Bhushan Steel ($BHUSANSTL) key annual financial indicators| mln. INR | 2012 | 2013 | 2014 | 2015 | 2016 | 2016/2015 |
|---|
P&L
|
|---|
| Revenue | 99,612 | 102,806 | 96,758 | 106,458 | 118,026 | 10.9% |
| SG&A | | | | | 8,852 | |
| EBITDA | 31,106 | 33,182 | 27,210 | 21,724 | 20,859 | -4.0% |
| Net Income | 10,148 | 9,069 | 591 | -12,568 | -29,114 | |
Balance Sheet
|
|---|
| Cash | 3,458 | 1,142 | 552 | 881 | 1,637 | 85.8% |
| Short Term Debt | 42,878 | 68,592 | 96,580 | 76,015 | 111,133 | 46.2% |
| Long Term Debt | 155,288 | 216,642 | 255,661 | 309,277 | 323,260 | 4.5% |
Cash flow
|
|---|
| Capex | 47,037 | 45,276 | 48,763 | 17,204 | 7,559 | -56.1% |
Ratios
|
|---|
| Revenue growth | 42.2% | 3.2% | -5.9% | 10.0% | 10.9% | |
| EBITDA growth | 53.1% | 6.7% | -18.0% | -20.2% | -4.0% | |
|
|---|
| EBITDA Margin | 31.2% | 32.3% | 28.1% | 20.4% | 17.7% | -2.7% |
| SG&A, % of revenue | | | | | 7.5% | |
| Net Income Margin | 10.2% | 8.8% | 0.6% | -11.8% | -24.7% | -12.9% |
| CAPEX, % of revenue | 47.2% | 44.0% | 50.4% | 16.2% | 6.4% | -9.8% |
|
|---|
| ROIC | 9.6% | 7.3% | 4.1% | 2.6% | 2.0% | -0.6% |
| ROE | 15.1% | 10.8% | 0.5% | -15.1% | -47.9% | -32.8% |
| Net Debt/EBITDA | 6.3x | 8.6x | 12.9x | 17.7x | 20.7x | 3.1x |
Peers in Iron & Steel/Interm.Products
Below you can find Bhushan Steel 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 |
|---|
| India Steel Works ($ISWL) | - | 20.5% | -15.4% | -16.3% | 13.8% |
| Maithan Alloys ($MAITHANALL) | - | 59.1% | 1.1% | 15.0% | 4.0% |
| Pennar Industries ($PENIND) | - | -8.5% | 0.5% | 12.7% | 3.4% |
| Visa Steel ($VISASTEEL) | - | -24.1% | 42.0% | -12.0% | 1.8% |
| Uttam Galva Steels ($UTTAMSTL) | - | 11.0% | -13.2% | 55.0% | -1.6% |
| |
|---|
| Median (29 companies) | 23.1% | 8.8% | 3.7% | -1.6% | -15.3% |
|---|
| Bhushan Steel ($BHUSANSTL) | - | 3.2% | -5.9% | 10.0% | 10.9% |
Top companies by EBITDA margin, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Ramsarup Industries ($RAMSARUP) | -5.1% | -51.9% | -17.8% | - | 82.3% |
| Jindal Steel & Power ($JINDALSTEL) | 37.5% | 30.5% | 28.1% | 29.8% | 17.2% |
| 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% |
| Jsw Steel ($JSWSTEEL) | 17.8% | 17.1% | 17.9% | 17.7% | 14.6% |
| |
|---|
| Median (27 companies) | 9.3% | 9.0% | 7.0% | 7.2% | 7.6% |
|---|
| Bhushan Steel ($BHUSANSTL) | 31.2% | 32.3% | 28.1% | 20.4% | 17.7% |
Top companies by CAPEX/Revenue, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Jindal Steel & Power ($JINDALSTEL) | 34.2% | 47.6% | 69.6% | 26.4% | 21.8% |
| Steel Authority Of India ($SAIL) | 20.9% | 20.7% | 19.3% | 16.9% | 17.3% |
| Jsw Steel ($JSWSTEEL) | 11.9% | 14.7% | 11.3% | 12.7% | 12.4% |
| Pennar Industries ($PENIND) | 4.8% | 1.8% | 4.5% | 2.4% | 12.3% |
| Sarda Energy & Minerals ($SARDAEN) | 48.9% | 24.1% | 6.1% | 5.5% | 11.1% |
| |
|---|
| Median (16 companies) | 9.7% | 11.6% | 7.7% | 4.9% | 5.9% |
|---|
| Bhushan Steel ($BHUSANSTL) | 47.2% | 44.0% | 50.4% | 16.2% | 6.4% |
Top companies by ROIC, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Tata Metaliks ($TATAMETALI) | -23.5% | -3.7% | 19.9% | 57.4% | 42.6% |
| Maithan Alloys ($MAITHANALL) | 16.3% | 15.1% | 5.5% | 15.3% | 19.0% |
| Pennar Industries ($PENIND) | 26.8% | 18.4% | 12.3% | 15.7% | 16.6% |
| Kirloskar Ferrous Industries ($KIRLFER) | 19.1% | 16.8% | 12.4% | 14.7% | 15.9% |
| Sunflag Iron & Steel Co ($SUNFLAG) | 7.2% | 5.6% | 8.3% | 11.2% | 13.4% |
| |
|---|
| Median (34 companies) | 6.8% | 5.4% | 6.0% | 5.0% | 3.5% |
|---|
| Bhushan Steel ($BHUSANSTL) | 9.6% | 7.3% | 4.1% | 2.6% | 2.0% |
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 ($KAJARIR) | 9.2x | 3.0x | 18.2x | 19.8x | 2.5x |
| Ocl Iron And Steel ($OISL) | 164.7x | 1,935.8x | 41.6x | 19.4x | - |
| Prakash Industries ($PRAKASH) | 2.5x | 2.8x | 2.5x | 11.9x | 3.4x |
| |
|---|
| Median (28 companies) | 4.6x | 4.4x | 3.4x | 1.7x | 0.9x |
|---|
| Bhushan Steel ($BHUSANSTL) | 6.3x | 8.6x | 12.9x | 17.7x | 20.7x |
