Rossell India reports 122% Net Income growth in 2016 and 14.2% Revenue growth
30-05-2016 • About Rossell India (
$ROSSELLIND) • By InTwits
Rossell India reported FY2016 financial results today. Here are the key drivers of the company's long term financial model:
- Rossell India is a fast growth stock: FY2016 revenue growth was 14.2%, 5 year revenue CAGR was 15.4% at FY2016 ROIC 5.0%
- Rossell India has high CAPEX intensity: 5 year average CAPEX/Revenue was 11.9%. At the same time it's a lot of higher than industry average of 6.4%.
- CAPEX is quite volatile: ₹254m in FY2016, ₹156m in FY2015, ₹210m in FY2014, ₹71m in FY2013, ₹91m in FY2012
- The company has potentially unprofitable business model: ROIC is 5.0%
- It operates with high leverage: Net Debt/EBITDA is 2.9x 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
The company's Revenue jumped on 14.2%. Revenue decline was accompanies by EBITDA margin decline. EBITDA Margin decreased on 3.4 pp from 31.2% to 27.9% in FY2016. EBITDA Margin followed a declining trend at -4.5 pp per annum in the last 5 years.
Net Income margin increased on 2.9 pp from 3.0% to 5.9% in FY2016.
Investments (CAPEX, working capital and M&A)
In FY2016 Rossell India had CAPEX/Revenue of 15.8%. Rossell India's CAPEX/Revenue increased on 9.0 pp from 6.7% in FY2013 to 15.8% in FY2016. Average CAPEX/Revenue for the last three years was 13.9%. To secure its fast growth Rossell India made large investments to CAPEX (107% of EBITDA).
Return on investment
The company operates at low ROIC (5.0%) and ROE (4.4%). ROIC increased slightly on 0.93 pp from 4.1% to 5.0% in FY2016. ROE increased on 2.4 pp from 2.0% to 4.4% in FY2016.
Leverage (Debt)
Debt level is 2.9x Net Debt / EBITDA and 3.0x Debt / EBITDA. Net Debt / EBITDA jumped on 0.3x from 2.6x to 2.9x in FY2016. Debt surged on 29.4% while cash surged on 187%. Net Debt/EBITDA stuck to a growing trend at 0.7x per annum in FY2012-FY2016.
Rossell India has short term refinancing risk: cash is only 4.3% of short term debt.
Valuation and dividends
Rossell India's trades at EV/EBITDA 10.6x and P/E 19.3x while industy averages are 17.8x and 21.9x.
Financial and operational results
Rossell India ($ROSSELLIND) key annual financial indicators| mln. INR | 2012 | 2013 | 2014 | 2015 | 2016 | 2016/2015 |
|---|
P&L
|
|---|
| Revenue | 828 | 1,059 | 1,416 | 1,411 | 1,611 | 14.2% |
| EBITDA | 257 | 292 | 376 | 207 | 237 | 14.5% |
| Net Income | 186 | 303 | 204 | 43 | 95 | 121.7% |
Balance Sheet
|
|---|
| Cash | 86 | 39 | 11 | 9 | 25 | 187.0% |
| Short Term Debt | 94 | 167 | 258 | 333 | 595 | 78.5% |
| Long Term Debt | 0 | 418 | 319 | 220 | 121 | -45.1% |
Cash flow
|
|---|
| Capex | 91 | 71 | 210 | 156 | 254 | 62.5% |
Ratios
|
|---|
| Revenue growth | 5.4% | 27.9% | 33.6% | -0.3% | 14.2% | |
| EBITDA growth | 1.7% | 13.4% | 28.7% | -44.8% | 14.5% | |
|
|---|
| EBITDA Margin | 31.0% | 27.5% | 26.5% | 14.7% | 14.7% | 0.0% |
| Net Income Margin | 22.5% | 28.6% | 14.4% | 3.0% | 5.9% | 2.9% |
| CAPEX, % of revenue | 11.0% | 6.7% | 14.8% | 11.1% | 15.8% | 4.7% |
|
|---|
| ROIC | | 12.1% | 12.7% | 4.1% | 5.0% | 0.9% |
| ROE | 11.8% | 16.7% | 10.0% | 2.0% | 4.4% | 2.4% |
| Net Debt/EBITDA | 0.0x | 1.9x | 1.5x | 2.6x | 2.9x | 0.3x |
Peers in Tea & Coffee
Below we provide Rossell 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 |
|---|
| Mcleod Russel India ($MCLEODRUSS) | - | 15.4% | 7.2% | -8.0% | 17.0% |
| Bombay Burmah Trading Corp ($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 ($TATACOFFEE) | - | 7.3% | -3.0% | 5.1% | 4.2% |
| |
|---|
| Median (8 companies) | 2.5% | 8.7% | 8.9% | 5.0% | 5.7% |
|---|
| Rossell India ($ROSSELLIND) | - | 27.9% | 33.6% | -0.3% | 14.2% |
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% |
| 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% |
| Mcleod Russel India ($MCLEODRUSS) | 27.5% | 23.2% | 20.4% | 8.1% | 8.8% |
| |
|---|
| Median (8 companies) | 8.7% | 13.8% | 13.5% | 9.7% | 9.4% |
|---|
| Rossell India ($ROSSELLIND) | 31.0% | 27.5% | 26.5% | 14.7% | 14.7% |
Top companies by CAPEX/Revenue, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Ccl Products (India) ($CCL) | 11.1% | 5.8% | 8.3% | 2.4% | 9.4% |
| Mcleod Russel India ($MCLEODRUSS) | 10.0% | 6.0% | 9.4% | 9.8% | 6.7% |
| 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 ($JAYSHREETEA) | - | - | - | - | 3.0% |
| |
|---|
| Median (7 companies) | 4.1% | 3.1% | 2.6% | 2.6% | 3.1% |
|---|
| Rossell India ($ROSSELLIND) | 11.0% | 6.7% | 14.8% | 11.1% | 15.8% |
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% |
| Mcleod Russel India ($MCLEODRUSS) | 18.6% | 15.7% | 12.9% | 2.0% | 3.0% |
| |
|---|
| Median (11 companies) | 10.8% | 14.8% | 15.4% | 11.0% | 6.5% |
|---|
| Rossell India ($ROSSELLIND) | - | 12.1% | 12.7% | 4.1% | 5.0% |
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 |
| Mcleod Russel India ($MCLEODRUSS) | 0.4x | 0.5x | 0.7x | 4.2x | 4.7x |
| Tata Coffee ($TATACOFFEE) | 3.6x | 2.6x | 2.7x | 2.5x | 2.7x |
| Tata Global Beverages ($TATAGLOBAL) | 1.4x | 1.5x | 1.0x | 1.0x | 1.3x |
| |
|---|
| Median (8 companies) | 2.1x | 1.7x | 0.4x | 1.0x | 2.0x |
|---|
| Rossell India ($ROSSELLIND) | 0.0x | 1.9x | 1.5x | 2.6x | 2.9x |
