Mahanagar Telephone Nigam reports 70.8% CAPEX growth in 2016 while 5.5% Revenue decline
30-05-2016 • About Mahanagar Telephone Nigam (
$MTNL) • By InTwits
Mahanagar Telephone Nigam reported FY2016 financial results today. Here are the key drivers of the company's long term financial model:
- Mahanagar Telephone Nigam is a company in decline: FY2016 revenue growth was -5.5%, 5 years revenue CAGR was -2.5%
- The company operates at negative EBITDA Margin: -21.2%
- Mahanagar Telephone Nigam spends a lot for Stock Based Compensation (SBC): average SBC/Revenue for FY2012-FY2016 is 0.0%. Average EBITDA Margin for the same period was -40.1%
- Mahanagar Telephone Nigam has high CAPEX intensity: 5 year average CAPEX/Revenue was 14.5%. At the same time it's in pair with industry average of 18.8%
- CAPEX is quite volatile: ₹5,102m in FY2016, ₹2,987m in FY2015, ₹1,983m in FY2014, ₹7,367m in FY2013, ₹7,531m in FY2012
- The company has unprofitable business model: ROIC is -9.8%
- It operates with high leverage: Net Debt/EBITDA is 4.3x while industry average is 2.5x
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 decreased on 5.5%. Revenue decline was worsened by EBITDA margin decline. EBITDA Margin decreased on 2.7 pp from -18.5% to -21.2% in FY2016.
SG&A as a % of Revenue increased slightly on 1.3 pp from 26.3% to 27.6% in FY2016.
Net Income margin jumped on 22.1 pp from -83.0% to -60.9% in FY2016.
Investments (CAPEX, working capital and M&A)
In FY2016 the company had CAPEX/Revenue of 15.4%. CAPEX/Revenue decreased on 5.6 pp from 21.1% in FY2013 to 15.4% in FY2016. For the last three years the average CAPEX/Revenue was 9.9%. During FY2012-FY2016 CAPEX as a % of Revenue bottomed in FY2014 at 5.7% and was growing since that time.
Return on investment
The company operates at negative ROIC (-9.8%) and ROE (-193.7%). ROIC showed almost no change in FY2016. ROE dropped on 112 pp from -81.7% to -194% in FY2016.
Leverage (Debt)
Company's Net Debt / EBITDA is 4.3x and Debt / EBITDA is . Net Debt / EBITDA didn't change in FY2016. Debt increased on 8.0% while cash jumped on 94.8%.
Mahanagar Telephone Nigam has short term refinancing risk: cash is only 2.2% of short term debt.
Financial and operational results
Mahanagar Telephone Nigam ($MTNL) key annual financial indicators| mln. INR | 2012 | 2013 | 2014 | 2015 | 2016 | 2016/2015 |
|---|
P&L
|
|---|
| Revenue | 34,415 | 34,964 | 34,757 | 34,940 | 33,036 | -5.5% |
| SG&A | 8,467 | 7,953 | 11,187 | 9,186 | 9,113 | -0.8% |
| EBITDA | -17,881 | -28,921 | -8,720 | -6,477 | -7,009 | |
| Net Income | -41,039 | -53,223 | 78,207 | -29,012 | -20,122 | |
Balance Sheet
|
|---|
| Cash | 904 | 1,141 | 2,504 | 990 | 1,928 | 94.8% |
| Short Term Debt | 26,484 | 48,449 | 61,064 | 65,991 | 88,739 | 34.5% |
| Long Term Debt | 70,000 | 69,374 | 81,100 | 100,090 | 90,590 | -9.5% |
Cash flow
|
|---|
| Capex | 7,531 | 7,367 | 1,983 | 2,987 | 5,102 | 70.8% |
Ratios
|
|---|
| Revenue growth | -8.1% | 1.6% | -0.6% | 0.5% | -5.5% | |
| EBITDA growth | 51.3% | 61.7% | -69.8% | -25.7% | 8.2% | |
|
|---|
| EBITDA Margin | -52.0% | -82.7% | -25.1% | -18.5% | -21.2% | -2.7% |
| SG&A, % of revenue | 24.6% | 22.7% | 32.2% | 26.3% | 27.6% | 1.3% |
| Net Income Margin | -119.2% | -152.2% | 225.0% | -83.0% | -60.9% | 22.1% |
| CAPEX, % of revenue | 21.9% | 21.1% | 5.7% | 8.5% | 15.4% | 6.9% |
|
|---|
| ROIC | -24.0% | -39.1% | -14.0% | -9.3% | -9.8% | -0.5% |
| ROE | -89.6% | | | -81.7% | -193.7% | -112.0% |
Peers in Telecom Services
Below we provide Mahanagar Telephone Nigam benchmarking against other companies in Telecom Services 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 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Idea Cellular ($IDEA) | - | 15.0% | 18.0% | 19.3% | 14.0% |
| Bharti Airtel ($BHARTIARTL) | - | 7.6% | 11.5% | 7.3% | 4.9% |
| |
|---|
| Median (2 companies) | - | 11.3% | 14.7% | 13.3% | 9.4% |
|---|
| Mahanagar Telephone Nigam ($MTNL) | - | 1.6% | -0.6% | 0.5% | -5.5% |
Top companies by EBITDA margin, %
| Top | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Idea Cellular ($IDEA) | 26.1% | 26.8% | 31.5% | 34.4% | 36.4% |
| Bharti Airtel ($BHARTIARTL) | 33.2% | 30.2% | 32.4% | 34.1% | 35.3% |
| |
|---|
| Median (2 companies) | 29.7% | 28.5% | 32.0% | 34.2% | 35.9% |
|---|
| Mahanagar Telephone Nigam ($MTNL) | -52.0% | -82.7% | -25.1% | -18.5% | -21.2% |
Top companies by CAPEX/Revenue, %
| Top | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Idea Cellular ($IDEA) | 24.3% | 15.6% | 14.0% | 13.4% | 21.0% |
| Bharti Airtel ($BHARTIARTL) | 20.2% | 16.3% | 13.3% | 15.9% | 20.0% |
| |
|---|
| Median (2 companies) | 22.2% | 16.0% | 13.7% | 14.7% | 20.5% |
|---|
| Mahanagar Telephone Nigam ($MTNL) | 21.9% | 21.1% | 5.7% | 8.5% | 15.4% |
Top companies by ROIC, %
| Top | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Bharti Airtel ($BHARTIARTL) | 8.9% | 7.0% | 9.4% | 11.7% | 12.4% |
| Idea Cellular ($IDEA) | 8.1% | 8.8% | 11.0% | 12.1% | 10.4% |
| |
|---|
| Median (2 companies) | 8.5% | 7.9% | 10.2% | 11.9% | 11.4% |
|---|
| Mahanagar Telephone Nigam ($MTNL) | -24.0% | -39.1% | -14.0% | -9.3% | -9.8% |
Top companies by Net Debt / EBITDA
| Top | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Idea Cellular ($IDEA) | 2.6x | 2.3x | 2.5x | 2.3x | 3.1x |
| Bharti Airtel ($BHARTIARTL) | 2.8x | 2.8x | 2.6x | 2.1x | 1.8x |
| |
|---|
| Median (2 companies) | 2.7x | 2.6x | 2.5x | 2.2x | 2.5x |
|---|
