Jain Irrigation Systems reports 4.8% EBITDA growth in 2016 and 2.2% Revenue growth

30-05-2016 • About Jain Irrigation Systems ($JISLJALEQS) • By InTwits

Jain Irrigation Systems reported FY2016 financial results today. Here are the key drivers of the company's long term financial model:

Jain Irrigation Systems has medium CAPEX intensity: 5 year average CAPEX/Revenue was 6.0%. At the same time it's a lot of higher than industry average of 4.9%.
CAPEX is quite volatile: ₹2,366m in FY2016, ₹2,205m in FY2015, ₹3,322m in FY2014, ₹3,000m in FY2013, ₹5,387m in FY2012
The company has business model with low profitability: ROIC is 8.4%
It operates with high leverage: Net Debt/EBITDA is 4.6x while industry average is 0.7x

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 increased on 2.2%. EBITDA Margin showed almost no change in FY2016. During the last 5 years EBITDA Margin bottomed in FY2015 at 12.4%.

SG&A as a % of Revenue showed almost no change in FY2016.

Net Income margin increased slightly on 0.50 pp from 0.90% to 1.4% in FY2016. During the last 5 years Net Income margin bottomed in FY2014 at -0.68% and was growing since that time.

Investments (CAPEX, working capital and M&A)

In FY2016 the company had CAPEX/Revenue of 3.8%. The company showed decline in CAPEX/Revenue of 2.2 pp from 6.0% in FY2013 to 3.8% in FY2016. It's average CAPEX/Revenue for the last three years was 4.3%. CAPEX as a % of Revenue declined at -1.7 pp per annum in FY2012-FY2016.

Return on investment

The company operates at low ROIC (8.4%) and ROE (3.9%). ROIC showed almost no change in FY2016. ROE increased slightly on 1.3 pp from 2.6% to 3.9% in FY2016. During FY2012-FY2016 ROE bottomed in FY2014 at -1.8% and was growing since that time.

Leverage (Debt)

Company's Net Debt / EBITDA is 4.6x and Debt / EBITDA is 5.1x. Net Debt / EBITDA dropped on 0.2x from 4.8x to 4.6x in FY2016. Debt increased on 3.0% while cash jumped on 25.6%. During FY2012-FY2016 Net Debt/EBITDA topped in FY2013 at 5.1x and was declining since that time.

Jain Irrigation Systems has short term refinancing risk: cash is only 17.8% of short term debt.

Valuation and dividends

Jain Irrigation Systems's trades at EV/EBITDA 4.7x and P/E 0.9x while industy averages are 17.8x and 21.9x. Jain Irrigation Systems's EV/(EBITDA-CAPEX) is 6.6x with the industry average at 22.8x.

Financial and operational results

Jain Irrigation Systems ($JISLJALEQS) key annual financial indicators

mln. INR	2012	2013	2014	2015	2016	2016/2015
P&L
Revenue	49,206	50,217	58,281	61,527	62,871	2.2%
SG&A			307	387	369	-4.6%
EBITDA	8,167	6,332	7,327	7,650	8,017	4.8%
Net Income	2,235	31	-398	554	883	59.4%
Balance Sheet
Cash	3,293	2,337	1,940	3,010	3,782	25.6%
Short Term Debt	21,950	20,041	21,889	22,401	21,210	-5.3%
Long Term Debt	12,326	14,329	14,977	16,957	19,310	13.9%
Cash flow
Capex	5,387	3,000	3,322	2,205	2,366	7.3%
Ratios
Revenue growth	20.9%	2.1%	16.1%	5.6%	2.2%
EBITDA growth	7.8%	-22.5%	15.7%	4.4%	4.8%

EBITDA Margin	16.6%	12.6%	12.6%	12.4%	12.8%	0.3%
SG&A, % of revenue			0.5%	0.6%	0.6%	-0.0%
Net Income Margin	4.5%	0.1%	-0.7%	0.9%	1.4%	0.5%
CAPEX, % of revenue	10.9%	6.0%	5.7%	3.6%	3.8%	0.2%

ROIC	13.4%	8.3%	9.0%	8.6%	8.4%	-0.2%
ROE	13.5%	0.2%	-1.8%	2.6%	3.9%	1.3%
Net Debt/EBITDA	3.8x	5.1x	4.8x	4.8x	4.6x	-0.2x

Peers in Plastic Products

Below we provide Jain Irrigation Systems benchmarking against other companies in Plastic 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
Acrysil ($ACRYSIL)	-	29.6%	33.8%	19.4%	31.6%
Shaily Engineering Plastics ($SHAILY)	-	-16.0%	23.3%	19.2%	25.5%
Astral Poly Technik ($ASTRAL)	-	41.6%	30.8%	32.4%	20.2%
Flexituff International ($FLEXITUFF)	-	29.9%	12.5%	8.4%	11.5%
Responsive Industries ($RESPONIND)	-	29.4%	15.5%	-19.2%	9.3%
Median (12 companies)	-	24.4%	12.6%	8.5%	6.1%
Jain Irrigation Systems ($JISLJALEQS)	-	2.1%	16.1%	5.6%	2.2%

Top companies by EBITDA margin, %


Top 5	FY2012	FY2013	FY2014	FY2015	FY2016
Acrysil ($ACRYSIL)	12.4%	16.8%	17.5%	19.5%	17.1%
Wim Plast ($WIMPLAST)	18.1%	17.9%	18.1%	17.0%	20.9%
Shaily Engineering Plastics ($SHAILY)	14.3%	13.9%	16.0%	14.8%	17.3%
Responsive Industries ($RESPONIND)	13.4%	11.5%	10.3%	12.2%	9.3%
Bloom Dekor ($BLOOM)	-	-	-	11.8%	-
Median (15 companies)	11.7%	11.2%	11.1%	9.7%	10.9%
Jain Irrigation Systems ($JISLJALEQS)	16.6%	12.6%	12.6%	12.4%	12.8%

Top companies by CAPEX/Revenue, %


Top 5	FY2012	FY2013	FY2014	FY2015	FY2016
Shaily Engineering Plastics ($SHAILY)	3.7%	-	10.7%	17.2%	13.0%
Astral Poly Technik ($ASTRAL)	11.9%	8.4%	8.6%	6.0%	8.0%
Flexituff International ($FLEXITUFF)	10.8%	10.3%	15.7%	10.0%	5.0%
Acrysil ($ACRYSIL)	7.8%	11.0%	9.6%	9.3%	5.0%
Wim Plast ($WIMPLAST)	14.3%	8.1%	3.7%	7.9%	3.3%
Median (7 companies)	7.8%	8.4%	8.6%	7.9%	5.0%
Jain Irrigation Systems ($JISLJALEQS)	10.9%	6.0%	5.7%	3.6%	3.8%

Top companies by ROIC, %


Top 5	FY2012	FY2013	FY2014	FY2015	FY2016
Wim Plast ($WIMPLAST)	31.8%	31.2%	31.0%	31.2%	31.6%
Shaily Engineering Plastics ($SHAILY)	19.5%	15.0%	19.3%	15.2%	18.2%
Astral Poly Technik ($ASTRAL)	29.3%	31.1%	33.3%	19.7%	17.3%
Acrysil ($ACRYSIL)	7.7%	16.2%	20.2%	21.0%	16.9%
Max India ($MAX)	8.9%	24.3%	7.0%	12.7%	12.8%
Median (21 companies)	10.0%	11.8%	19.3%	15.2%	16.9%
Jain Irrigation Systems ($JISLJALEQS)	13.4%	8.3%	9.0%	8.6%	8.4%

Top companies by Net Debt / EBITDA


Top 5	FY2012	FY2013	FY2014	FY2015	FY2016
Flexituff International ($FLEXITUFF)	2.2x	3.1x	4.3x	5.3x	4.5x
Responsive Industries ($RESPONIND)	3.3x	2.9x	2.4x	1.9x	1.7x
Shaily Engineering Plastics ($SHAILY)	1.9x	1.8x	1.9x	2.6x	1.5x
Acrysil ($ACRYSIL)	2.9x	2.2x	2.0x	2.7x	1.4x
Astral Poly Technik ($ASTRAL)	1.0x	0.7x	0.9x	1.1x	0.7x
Median (18 companies)	2.1x	2.1x	0.0x	0.0x	0.0x
Jain Irrigation Systems ($JISLJALEQS)	3.8x	5.1x	4.8x	4.8x	4.6x

Jain Irrigation Systems stock price chart

Jain Irrigation Systems financials

mln.	FY2010	FY2011	FY2012

Revenue	33,858	40,711	49,206
EBITDA	5,926	7,578	8,167
Net income	2,476	2,807	2,235
CAPEX	4,657	4,952	5,387
Debt	24,447	29,853	34,276
Cash	4,940	4,110	3,293

About Jain Irrigation Systems

Jain Irrigation Systems Limited, together with its subsidiaries, operates as an agri-business company in India, Europe, North America, and rest of the world. The company operates through Hi-Tech Agri Input Products, Industrial Products, and Non-Conventional Energy segments. It supplies agricultural inputs, such as drip irrigation systems, sprinkler irrigation systems, PVC piping systems, water well casing, screens and sure-loc pipes, HDPE and MDPE piping systems, spray pipes, tissue culture banana plants, and vermicompost; and processes agricultural produce, including onion and vegetable dehydration, banana, mango, and fruit processing, and jatropha cultivation. The company is also involved in the cultivation and supply of agricultural crops; and provision of agricultural and engineering consultancy, as well as agricultural services. In addition, it offers polyethylene piping systems; EX-CEL plastic sheets; pipe fittings; and protected cultivation products, including green houses, poly houses and tunnels, and net houses, as well as develops solar photovoltaic modules, solar water heaters, solar pumping systems, solar lighting and appliances, bio-energy products, and steam generation systems. The company offers its products for the urban household, urban housing, community development, mining, plant tissue culture, chemical, oil and gas exploration, optic fiber ducting, advertisement and signage, landscaping, water shed development, waste land development, fruit and vegetable processing, and farm production and management markets, as well as for small farmers, green houses, and sugar factories. Jain Irrigation Systems Limited also exports its products. The company was founded in 1963 and is headquartered in Jalgaon, India.