Mcleod Russel India Debt jumped on 39.1% and Revenue surged on 17.0%
30-05-2016 • About Mcleod Russel India (
$MCLEODRUSS) • By InTwits
Mcleod Russel India reported FY2016 financial results today. Here are the key drivers of the company's long term financial model:
- EBITDA Margin is quite volatile: 8.8% in FY2016, 8.1% in FY2015, 20.4% in FY2014, 23.2% in FY2013, 27.5% in FY2012
- Mcleod Russel India 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 6.4%.
- CAPEX is quite volatile: ₹882m in FY2016, ₹477m in FY2015, ₹888m in FY2014, ₹1,658m in FY2013, ₹556m in FY2012
- The company has potentially unprofitable business model: ROIC is 3.0%
- It operates with high leverage: Net Debt/EBITDA is 4.7x while industry average is 1.7x
Below you can find a comprehensive analysis of the key data driving the company's performance and the stock price.
Revenue and profitability
Mcleod Russel India's Revenue jumped on 17.0%. Having declining revenue the company managed to increase EBITDA margin. EBITDA Margin increased on 5.2 pp from 6.6% to 11.8% in FY2016. EBITDA Margin followed a declining trend at -5.2 pp per annum in FY2012-FY2016.
Net Income margin showed almost no change in FY2016. Net Income margin stuck to a declining trend at -5.0 pp per annum in the last 5 years.
Investments (CAPEX, working capital and M&A)
In FY2016 Mcleod Russel India had CAPEX/Revenue of 6.7%. The company's CAPEX/Revenue increased slightly on 0.73 pp from 6.0% in FY2013 to 6.7% in FY2016. Average CAPEX/Revenue for the last three years was 8.6%. To secure its fast growth the company invested a large share of EBITDA (76.2%) to CAPEX.
Return on investment
The company operates at low ROIC (3.0%) and ROE (1.8%). ROIC increased slightly on 1.1 pp from 2.0% to 3.0% in FY2016. ROE showed almost no change in FY2016. ROIC declined at -4.5 pp per annum in FY2012-FY2016. ROE followed a declining trend at -4.5 pp per annum in the last 5 years.
Leverage (Debt)
Debt level is 4.7x Net Debt / EBITDA and 4.9x Debt / EBITDA. Net Debt / EBITDA jumped on 0.5x from 4.2x to 4.7x in FY2016. Debt surged on 39.1% while cash increased on 6.5%. Net Debt/EBITDA grew at 1.2x per annum in FY2012-FY2016.
Mcleod Russel India has short term refinancing risk: cash is only 8.2% of short term debt.
Valuation and dividends
Mcleod Russel India's trades at EV/EBITDA 16.5x and P/E 54.0x while industy averages are 17.8x and 21.9x. The company's EV/(EBITDA-CAPEX) is 69.3x with the industry average at 22.8x.
Financial and operational results
Mcleod Russel India ($MCLEODRUSS) key annual financial indicators| mln. INR | 2012 | 2013 | 2014 | 2015 | 2016 | 2016/2015 |
|---|
P&L
|
|---|
| Revenue | 14,453 | 16,686 | 17,888 | 16,460 | 19,263 | 17.0% |
| EBITDA | 3,979 | 3,863 | 3,658 | 1,333 | 1,700 | 27.5% |
| Net Income | 2,879 | 2,739 | 2,572 | 312 | 373 | 19.6% |
Balance Sheet
|
|---|
| Cash | 317 | 439 | 450 | 396 | 421 | 6.5% |
| Short Term Debt | 1,040 | 2,228 | 2,213 | 3,384 | 5,110 | 51.0% |
| Long Term Debt | 940 | 258 | 826 | 2,633 | 3,260 | 23.8% |
Cash flow
|
|---|
| Capex | 1,445 | 999 | 1,679 | 1,614 | 1,295 | -19.8% |
Ratios
|
|---|
| Revenue growth | 13.9% | 15.4% | 7.2% | -8.0% | 17.0% | |
| EBITDA growth | 10.0% | -2.9% | -5.3% | -63.6% | 27.5% | |
|
|---|
| EBITDA Margin | 27.5% | 23.2% | 20.4% | 8.1% | 8.8% | 0.7% |
| Net Income Margin | 19.9% | 16.4% | 14.4% | 1.9% | 1.9% | 0.0% |
| CAPEX, % of revenue | 10.0% | 6.0% | 9.4% | 9.8% | 6.7% | -3.1% |
|
|---|
| ROIC | 18.6% | 15.7% | 12.9% | 2.0% | 3.0% | 1.1% |
| ROE | 17.6% | 14.8% | 12.5% | 1.5% | 1.8% | 0.3% |
| Net Debt/EBITDA | 0.4x | 0.5x | 0.7x | 4.2x | 4.7x | 0.5x |
Peers in Tea & Coffee
Below we provide Mcleod Russel India benchmarking against other companies in Tea & Coffee 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 |
|---|
| Rossell India ($ROSSELLIND) | - | 27.9% | 33.6% | -0.3% | 14.2% |
| Bombay Burmah Trading Corp ($BBTC) | - | 10.0% | 11.5% | 12.7% | 10.3% |
| Ccl Products (India) ($CCL) | - | 29.6% | 10.2% | 22.8% | 5.9% |
| Warren Tea ($WARRENTEA) | - | -44.0% | 17.7% | -7.5% | 5.7% |
| Tata Coffee ($TATACOFFEE) | - | 7.3% | -3.0% | 5.1% | 4.2% |
| |
|---|
| Median (8 companies) | 2.5% | 8.7% | 10.0% | 5.0% | 5.7% |
|---|
| Mcleod Russel India ($MCLEODRUSS) | - | 15.4% | 7.2% | -8.0% | 17.0% |
Top companies by EBITDA margin, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Ccl Products (India) ($CCL) | 20.3% | 20.1% | 21.5% | 20.6% | 22.0% |
| Tata Coffee ($TATACOFFEE) | 12.8% | 19.2% | 19.9% | 20.2% | 17.7% |
| Rossell India ($ROSSELLIND) | 31.0% | 27.5% | 26.5% | 14.7% | 14.7% |
| Bombay Burmah Trading Corp ($BBTC) | 6.0% | 6.8% | 8.6% | 10.5% | 13.4% |
| Tata Global Beverages ($TATAGLOBAL) | 9.5% | 10.6% | 9.9% | 9.7% | 10.0% |
| |
|---|
| Median (8 companies) | 8.7% | 13.8% | 13.5% | 10.5% | 11.7% |
|---|
| Mcleod Russel India ($MCLEODRUSS) | 27.5% | 23.2% | 20.4% | 8.1% | 8.8% |
Top companies by CAPEX/Revenue, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Rossell India ($ROSSELLIND) | 11.0% | 6.7% | 14.8% | 11.1% | 15.8% |
| Ccl Products (India) ($CCL) | 11.1% | 5.8% | 8.3% | 2.4% | 9.4% |
| Tata Coffee ($TATACOFFEE) | 3.2% | 4.3% | 4.0% | 3.6% | 3.6% |
| Bombay Burmah Trading Corp ($BBTC) | 4.7% | 3.6% | 2.3% | 1.6% | 3.1% |
| Jay Shree Tea & Industries ($JAYSHREETEA) | - | - | - | - | 3.0% |
| |
|---|
| Median (7 companies) | 4.1% | 3.1% | 2.6% | 2.6% | 3.1% |
|---|
| Mcleod Russel India ($MCLEODRUSS) | 10.0% | 6.0% | 9.4% | 9.8% | 6.7% |
Top companies by ROIC, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Bombay Burmah Trading Corp ($BBTC) | 10.7% | 13.9% | 20.6% | 23.7% | 31.0% |
| Ccl Products (India) ($CCL) | 16.1% | 18.0% | 19.7% | 23.0% | 25.7% |
| Tata Coffee ($TATACOFFEE) | 10.9% | 16.2% | 14.0% | 14.0% | 11.5% |
| Tata Global Beverages ($TATAGLOBAL) | 8.2% | 9.6% | 8.1% | 8.0% | 6.5% |
| Rossell India ($ROSSELLIND) | - | 12.1% | 12.7% | 4.1% | 5.0% |
| |
|---|
| Median (11 companies) | 10.7% | 13.3% | 15.4% | 11.0% | 6.5% |
|---|
| Mcleod Russel India ($MCLEODRUSS) | 18.6% | 15.7% | 12.9% | 2.0% | 3.0% |
Top companies by Net Debt / EBITDA
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Jay Shree Tea & Industries ($JAYSHREETEA) | - | - | - | - | 10.2x |
| Andrew Yule & Company ($ANDREWYU) | 2.1x | 5.4x | 1.9x | 1.7x | 4.7x |
| Rossell India ($ROSSELLIND) | 0.0x | 1.9x | 1.5x | 2.6x | 2.9x |
| Tata Coffee ($TATACOFFEE) | 3.6x | 2.6x | 2.7x | 2.5x | 2.7x |
| Tata Global Beverages ($TATAGLOBAL) | 1.4x | 1.5x | 1.0x | 1.0x | 1.3x |
| |
|---|
| Median (8 companies) | 2.1x | 1.8x | 0.5x | 1.0x | 2.0x |
|---|
| Mcleod Russel India ($MCLEODRUSS) | 0.4x | 0.5x | 0.7x | 4.2x | 4.7x |
