Fiem Industries reports 85.5% CAPEX growth in 2016 and 19.4% Revenue growth

30-05-2016 • About Fiem Industries ($FIEMIND) • By InTwits

Fiem Industries reported FY2016 financial results today. Here are the key drivers of the company's long term financial model:

Fiem Industries is a fast growth stock: FY2016 revenue growth was 19.4%, 5 year revenue CAGR was 18.2% at FY2016 ROIC 23.1%
EBITDA Margin is relatively stable: 13.0% in FY2016 vs. 12.6% in FY2015 vs. 13.7% in FY2012
Fiem Industries has medium CAPEX intensity: 5 year average CAPEX/Revenue was 8.4%. At the same time it's a lot of higher than industry average of 6.0%.
CAPEX is quite volatile: ₹1,094m in FY2016, ₹590m in FY2015, ₹477m in FY2014, ₹282m in FY2013, ₹666m in FY2012
The company has highly profitable business model: ROIC is 23.1%
It operates with high leverage: Net Debt/EBITDA is 1.1x while industry average is 0.6x

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

Revenue and profitability

Fiem Industries's Revenue jumped on 19.4%. EBITDA Margin showed almost no change in FY2016. During the last 5 years EBITDA Margin bottomed in FY2013 at 12.2% and was growing since that time.

Net Income margin increased slightly on 0.68 pp from 5.2% to 5.9% in FY2016. Net Income margin stuck to a growing trend at 0.43 pp per annum in FY2012-FY2016.

Investments (CAPEX, working capital and M&A)

The company's CAPEX/Revenue was 11.2% in FY2016. The company showed CAPEX/Revenue growth of 6.5 pp from 4.7% in FY2013 to 11.2% in FY2016. It's average CAPEX/Revenue for the last three years was 8.3%. Fiem Industries invested a big chunk of EBITDA (85.9%) to CAPEX to secure its growth. During FY2012-FY2016 CAPEX as a % of Revenue bottomed in FY2013 at 4.7% and was growing since that time.

Return on investment

The company operates at high and attractive ROIC (23.1%) and ROE (22.9%). ROIC increased on 2.9 pp from 20.2% to 23.1% in FY2016. ROE increased on 2.9 pp from 20.0% to 22.9% in FY2016. During the last 5 years ROIC bottomed in FY2013 at 16.9% and was growing since that time. ROE followed a growing trend at 1.7 pp per annum in the last 5 years.

Leverage (Debt)

Debt level is 1.1x Net Debt / EBITDA and 1.1x Debt / EBITDA. Net Debt / EBITDA decreased on 0.1x from 1.1x to 1.1x in FY2016. Debt jumped on 19.6% while cash jumped on 172%. Net Debt/EBITDA followed a declining trend at -0.3x per annum in FY2012-FY2016.

Fiem Industries has short term refinancing risk: cash is only 9.0% of short term debt.

Valuation and dividends

The company's trades at EV/EBITDA 7.9x and P/E 15.1x while industy averages are 17.8x and 21.9x. Fiem Industries's EV/(EBITDA-CAPEX) is 56.0x with the industry average at 22.8x.

Financial and operational results

Fiem Industries ($FIEMIND) key annual financial indicators

mln. INR	2012	2013	2014	2015	2016	2016/2015
P&L
Revenue	5,320	6,031	7,162	8,201	9,790	19.4%
EBITDA	727	737	886	1,030	1,273	23.6%
Net Income	211	277	373	425	573	35.0%
Balance Sheet
Cash	17	16	18	16	44	171.9%
Short Term Debt	677	580	611	657	492	-25.1%
Long Term Debt	950	762	580	515	909	76.5%
Cash flow
Capex	666	282	477	590	1,094	85.5%
Ratios
Revenue growth	25.2%	13.4%	18.7%	14.5%	19.4%
EBITDA growth	77.4%	1.3%	20.2%	16.3%	23.6%

EBITDA Margin	13.7%	12.2%	12.4%	12.6%	13.0%	0.4%
Net Income Margin	4.0%	4.6%	5.2%	5.2%	5.9%	0.7%
CAPEX, % of revenue	12.5%	4.7%	6.7%	7.2%	11.2%	4.0%

ROIC	18.7%	16.9%	19.9%	20.2%	23.1%	2.9%
ROE	15.7%	17.8%	20.4%	20.0%	22.9%	2.9%
Net Debt/EBITDA	2.2x	1.8x	1.3x	1.1x	1.1x	-0.1x

Peers in Auto Parts & Equipment

Below we provide Fiem Industries benchmarking against other companies in Auto Parts & Equipment 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
Suprajit Engineering ($SUPRAJIT)	-	9.4%	17.9%	12.2%	55.7%
Ip Rings ($IPRINGLTD)	-	2.4%	-0.1%	19.5%	16.7%
Amara Raja Batteries ($AMARAJABAT)	-	25.1%	16.1%	22.6%	11.4%
Spectra Industries ($SPECTRA)	-	40.2%	-10.1%	57.1%	11.1%
Motherson Sumi Systems ($MOTHERSUMI)	-	71.3%	20.2%	14.0%	10.7%
Median (35 companies)	12.1%	2.4%	4.9%	8.7%	2.8%
Fiem Industries ($FIEMIND)	-	13.4%	18.7%	14.5%	19.4%

Top companies by EBITDA margin, %


Top 5	FY2012	FY2013	FY2014	FY2015	FY2016
Ist ($ISTLTD)	-	-	-	71.6%	-
Tube Investments Of India ($TUBEINVEST)	18.4%	24.4%	28.3%	30.0%	21.4%
Shivam Autotech ($SHIVAMAUTO)	24.1%	24.1%	20.6%	18.7%	16.6%
Amara Raja Batteries ($AMARAJABAT)	14.9%	15.7%	14.2%	17.0%	17.6%
Suprajit Engineering ($SUPRAJIT)	16.2%	17.0%	17.2%	16.2%	17.4%
Median (45 companies)	10.8%	9.8%	10.1%	9.9%	10.8%
Fiem Industries ($FIEMIND)	13.7%	12.2%	12.4%	12.6%	13.0%

Top companies by CAPEX/Revenue, %


Top 5	FY2012	FY2013	FY2014	FY2015	FY2016
Shivam Autotech ($SHIVAMAUTO)	11.6%	4.1%	4.9%	12.5%	27.9%
Amara Raja Batteries ($AMARAJABAT)	3.7%	2.5%	10.9%	9.6%	11.0%
Steel Strips Wheels ($SSWL)	13.3%	11.4%	5.8%	4.5%	9.7%
Jbm Auto ($JBMA)	9.8%	8.4%	-	14.4%	7.8%
Rico Auto Industries ($RICOAUTO)	5.8%	10.9%	5.7%	14.2%	7.4%
Median (22 companies)	5.7%	4.5%	4.6%	4.5%	4.9%
Fiem Industries ($FIEMIND)	12.5%	4.7%	6.7%	7.2%	11.2%

Top companies by ROIC, %


Top 5	FY2012	FY2013	FY2014	FY2015	FY2016
Amara Raja Batteries ($AMARAJABAT)	32.1%	34.5%	30.3%	35.4%	33.7%
Suprajit Engineering ($SUPRAJIT)	31.8%	28.0%	26.1%	22.9%	25.1%
Motherson Sumi Systems ($MOTHERSUMI)	13.5%	16.5%	25.0%	24.9%	25.1%
Gabriel India ($GABRIEL)	19.9%	15.5%	18.0%	24.0%	25.0%
Harita Seating Systems ($HARITASEAT)	16.6%	16.2%	12.7%	12.5%	22.4%
Median (48 companies)	15.7%	11.9%	14.5%	14.5%	13.6%
Fiem Industries ($FIEMIND)	18.7%	16.9%	19.9%	20.2%	23.1%

Top companies by Net Debt / EBITDA


Top 5	FY2012	FY2013	FY2014	FY2015	FY2016
Shivam Autotech ($SHIVAMAUTO)	2.0x	1.5x	1.5x	2.2x	4.3x
Steel Strips Wheels ($SSWL)	5.4x	6.3x	6.5x	5.6x	4.2x
Jbm Auto ($JBMA)	3.0x	2.8x	1.7x	2.5x	2.7x
Rico Auto Industries ($RICOAUTO)	3.6x	4.2x	2.3x	1.5x	2.1x
Subros ($SUBROS)	3.1x	2.8x	3.1x	3.1x	1.9x
Median (39 companies)	1.2x	2.3x	0.7x	0.0x	0.0x
Fiem Industries ($FIEMIND)	2.2x	1.8x	1.3x	1.1x	1.1x

Fiem Industries stock price chart

Fiem Industries financials

mln.	FY2010	FY2011	FY2012

Revenue	9,308	4,248	5,320
EBITDA	308.6	410.1	727.4
Net income	105.7	110.6	211.4
CAPEX	255.1	902.1	666.1
Debt	542.4	1,307	1,627
Cash	14.850	44.184	16.820

About Fiem Industries

Fiem Industries Limited manufactures and supplies automotive lighting and signaling equipment, and rear view mirrors in India and internationally. The company offers head lamps, tail lamps, blinker lamps, signaling lamps, interior lamps, front/fog auxiliary lamps, number plate lamps, work lamps, LED tail lamps, direction indicators, side lamps, other markers, side markers, bulbs, decorative lights, display panels, roof lamps, wheel covers, warning triangles, complete rear fender assembly, frame assembly, mudguards, plastic parts and sheet metal components, etc. It also provides inside and outside rear view mirrors; warning triangles and beacon lamps reflex reflectors; and LED lamps, including automotive lamps, LED lighting tubes, LED replacement bulbs, and outdoor patio LED lights. Its customers include four-wheeler and two-wheeler manufacturing companies. The company also exports LED luminaries, such as LED bulbs, LED tube lights, LED ceiling lights, LED down lights, LED solar lanterns, LED torches and LED street lights, LED bay lights, LED bollards, and LED flood lights. Fiem Industries Limited was incorporated in 1989 and is based in Sonepat, India.