Lincoln Pharmaceuticals CAPEX jumped on 757% and Revenue surged on 50.4%
30-05-2016 • About Lincoln Pharmaceuticals (
$LINCOPH) • By InTwits
Lincoln Pharmaceuticals reported FY2016 financial results today. Here are the key drivers of the company's long term financial model:
- Lincoln Pharmaceuticals is a fast growth stock: FY2016 revenue growth was 50.4%, 5 year revenue CAGR was 17.8% at FY2016 ROIC 17.5%
- Lincoln Pharmaceuticals has medium CAPEX intensity: 5 year average CAPEX/Revenue was 6.1%. At the same time it's in pair with industry average of 7.4%
- CAPEX is quite volatile: ₹337m in FY2016, ₹39m in FY2015, ₹39m in FY2014, ₹188m in FY2013, ₹171m in FY2012
- The company has highly profitable business model: ROIC is 17.5%
- It operates with medium-size leverage: Net Debt/EBITDA is 1.5x while industry average is -0.2x
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 surged on 50.4%. Revenue decline was slowing down on average by 11.0 pp per annum in the last 5 years. EBITDA Margin showed almost no change in FY2016. EBITDA Margin stuck to a growing trend at 0.83 pp per annum in FY2012-FY2016.
Net Income margin showed almost no change in FY2016. Net Income margin grew at 0.71 pp per annum in FY2012-FY2016.
Investments (CAPEX, working capital and M&A)
In FY2016 the company had CAPEX/Revenue of 8.4%. The company's CAPEX/Revenue decreased slightly on 1.2 pp from 9.7% in FY2013 to 8.4% in FY2016. It's average CAPEX/Revenue for the last three years was 3.9%. The company invested a big chunk of EBITDA (81.2%) to CAPEX to secure its growth.
Return on investment
The company operates at good ROIC (17.5%) and ROE (18.9%). ROIC increased on 5.1 pp from 12.4% to 17.5% in FY2016. ROE increased on 4.6 pp from 14.3% to 18.9% in FY2016. ROIC grew at 2.3 pp per annum in FY2012-FY2016. ROE grew at 2.8 pp per annum in the last 5 years.
Leverage (Debt)
Company's Net Debt / EBITDA is 1.5x and Debt / EBITDA is 1.8x. Net Debt / EBITDA dropped on 0.8x from 2.3x to 1.5x in FY2016. Debt showed almost no change in FY2016 while cash increased on 9.2%. Net Debt/EBITDA declined at -0.7x per annum in FY2012-FY2016.
Lincoln Pharmaceuticals has short term refinancing risk: cash is only 23.9% of short term debt.
Valuation and dividends
Lincoln Pharmaceuticals's trades at EV/EBITDA 7.3x and P/E 10.1x while industy averages are 17.8x and 21.9x. Lincoln Pharmaceuticals's EV/(EBITDA-CAPEX) is 38.9x with the industry average at 22.8x.
Financial and operational results
Lincoln Pharmaceuticals ($LINCOPH) key annual financial indicators| mln. INR | 2012 | 2013 | 2014 | 2015 | 2016 | 2016/2015 |
|---|
P&L
|
|---|
| Revenue | 1,876 | 1,947 | 2,113 | 2,661 | 4,002 | 50.4% |
| EBITDA | 139 | 156 | 211 | 276 | 415 | 50.7% |
| Net Income | 51 | 97 | 107 | 150 | 237 | 57.8% |
Balance Sheet
|
|---|
| Cash | 120 | 94 | 50 | 115 | 126 | 9.2% |
| Short Term Debt | 512 | 585 | 489 | 507 | 526 | 3.8% |
| Long Term Debt | 143 | 171 | 192 | 255 | 236 | -7.3% |
Cash flow
|
|---|
| Capex | 171 | 188 | 39 | 39 | 337 | 757.1% |
Ratios
|
|---|
| Revenue growth | 6.3% | 3.8% | 8.5% | 25.9% | 50.4% | |
| EBITDA growth | 44.0% | 11.9% | 35.5% | 30.7% | 50.7% | |
|
|---|
| EBITDA Margin | 7.4% | 8.0% | 10.0% | 10.4% | 10.4% | 0.0% |
| Net Income Margin | 2.7% | 5.0% | 5.0% | 5.6% | 5.9% | 0.3% |
| CAPEX, % of revenue | 9.1% | 9.7% | 1.9% | 1.5% | 8.4% | 7.0% |
|
|---|
| ROIC | 8.4% | 7.8% | 10.0% | 12.4% | 17.5% | 5.1% |
| ROE | 6.5% | 11.4% | 11.3% | 14.3% | 18.9% | 4.6% |
| Net Debt/EBITDA | 3.8x | 4.3x | 3.0x | 2.3x | 1.5x | -0.8x |
Peers in Pharmaceuticals
Below we provide Lincoln Pharmaceuticals benchmarking against other companies in Pharmaceuticals 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 |
|---|
| Alembic Pharmaceuticals ($APLLTD) | - | 3.7% | 22.6% | 10.4% | 53.1% |
| Torrent Pharmaceuticals ($TORNTPHARM) | - | 17.7% | 32.2% | 13.6% | 42.4% |
| Natco Pharma ($NATCOPHARM) | - | 26.1% | 11.9% | 11.7% | 38.3% |
| Mangalam Drugs & Organics ($MANGALAM) | - | -18.2% | -2.1% | 79.8% | 33.7% |
| Cipla ($CIPLA) | - | 18.1% | 21.5% | 10.8% | 22.9% |
| |
|---|
| Median (33 companies) | 27.7% | 14.9% | 13.7% | 8.6% | 11.0% |
|---|
| Lincoln Pharmaceuticals ($LINCOPH) | - | 3.8% | 8.5% | 25.9% | 50.4% |
Top companies by Gross margin, %
| Top | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Dr.Reddy'S Laboratories ($DRREDDY) | - | 52.1% | 57.4% | 57.6% | 59.6% |
| Omega Laboratories ($OMEGALAB) | 0.0% | 0.0% | 0.0% | 0.0% | 0.0% |
| |
|---|
| Median (2 companies) | 46.9% | 26.1% | 28.7% | 28.8% | 29.8% |
|---|
Top companies by EBITDA margin, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Divi'S Laboratories ($DIVISLAB) | 37.2% | 38.2% | 40.2% | 37.4% | 37.5% |
| Hester Biosciences ($HESTERBIO) | - | - | - | 32.9% | - |
| Sun Pharmaceutical Industries ($SUNPHARMA) | 40.8% | 44.3% | 44.9% | 29.2% | 30.6% |
| Natco Pharma ($NATCOPHARM) | 21.5% | 23.2% | 24.9% | 26.2% | 24.1% |
| Dr.Reddy'S Laboratories ($DRREDDY) | 25.8% | 22.9% | 25.1% | 23.2% | 25.8% |
| |
|---|
| Median (53 companies) | 12.9% | 13.4% | 15.0% | 12.1% | 16.1% |
|---|
| Lincoln Pharmaceuticals ($LINCOPH) | 7.4% | 8.0% | 10.0% | 10.4% | 10.4% |
Top companies by CAPEX/Revenue, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| J.B.Chemicals & Pharmaceuticals ($JBCHEPHARM) | 10.0% | 5.8% | 6.0% | 6.2% | 15.9% |
| Claris Lifesciences ($CLARIS) | 58.1% | 42.9% | - | 103.1% | 15.8% |
| Marksans Pharma ($MARKSANS) | 1.5% | 1.5% | 0.8% | 4.6% | 14.8% |
| Natco Pharma ($NATCOPHARM) | 24.4% | 16.3% | 14.4% | 14.1% | 13.8% |
| Sun Pharmaceutical Industries ($SUNPHARMA) | 8.9% | 7.5% | 5.7% | 8.6% | 12.2% |
| |
|---|
| Median (26 companies) | 7.7% | 7.5% | 5.8% | 6.2% | 8.3% |
|---|
| Lincoln Pharmaceuticals ($LINCOPH) | 9.1% | 9.7% | 1.9% | 1.5% | 8.4% |
Top companies by ROIC, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Alembic Pharmaceuticals ($APLLTD) | 27.5% | 29.1% | 41.5% | 35.7% | 62.1% |
| Torrent Pharmaceuticals ($TORNTPHARM) | 26.4% | 30.5% | 33.2% | 19.7% | 44.2% |
| Abbott India ($ABBOTINDIA) | 29.6% | 26.9% | 30.5% | 34.2% | 34.1% |
| Divi'S Laboratories ($DIVISLAB) | 30.6% | 30.4% | 32.3% | 30.5% | 31.9% |
| Jenburkt Pharmaceuticals ($JENBURPH) | 34.1% | 29.0% | 32.4% | 35.3% | 31.4% |
| |
|---|
| Median (56 companies) | 14.0% | 13.4% | 15.6% | 13.3% | 15.9% |
|---|
| Lincoln Pharmaceuticals ($LINCOPH) | 8.4% | 7.8% | 10.0% | 12.4% | 17.5% |
Top companies by Net Debt / EBITDA
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Jubilant Life Sciences Limited ($JUBILANT) | 4.0x | 3.5x | 3.5x | 6.4x | 3.2x |
| Claris Lifesciences ($CLARIS) | 1.9x | 1.1x | 1.8x | 3.2x | 2.9x |
| Themis Medicare ($THEMISMED) | - | 7.9x | 0.0x | 0.0x | 2.9x |
| Glenmark Pharmaceuticals ($GLENMARK) | 2.7x | 2.1x | 2.2x | 2.5x | 2.2x |
| Dishman Pharmaceuticals & Chemicals ($DISHMAN) | 3.6x | 2.6x | 2.3x | 2.9x | 2.1x |
| |
|---|
| Median (40 companies) | 1.5x | 1.3x | 0.2x | 0.0x | 0.1x |
|---|
| Lincoln Pharmaceuticals ($LINCOPH) | 3.8x | 4.3x | 3.0x | 2.3x | 1.5x |
