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Tata Motors reports 21.2% Net Income decline in 2016 while 4.5% Revenue growth

30-05-2016 • About Tata Motors ($TATAMOTORS) • By InTwits

Tata Motors reported FY2016 financial results today. Overall the company's long term financial model is characterised by the following facts:
  • Tata Motors has high CAPEX intensity: 5 year average CAPEX/Revenue was 11.0%. At the same time it's a lot of higher than industry average of 2.8%.
  • CAPEX is quite volatile: ₹175m in FY2016, ₹0m in FY2015, ₹0m in FY2014, ₹9,546m in FY2013, ₹14,414m in FY2012
  • The company has highly profitable business model: ROIC is 14.5%
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 4.5%. EBITDA Margin showed almost no change in FY2016. EBITDA Margin grew at 0.60 pp per annum in FY2012-FY2016.

Net Income margin decreased slightly on 1.3 pp from 5.4% to 4.1% in FY2016.

Investments (CAPEX, working capital and M&A)


Tata Motors's CAPEX/Revenue was 12.1% in FY2016. The company showed small growth in CAPEX/Revenue of 1.9 pp from 10.2% in FY2013 to 12.1% in FY2016. Average CAPEX/Revenue for the last three years was 12.1%. The company maintained rich investment policy and has spent a big chunk of EBITDA (85.3%) to CAPEX. CAPEX as a % of Revenue grew at 0.93 pp per annum in FY2012-FY2016.

Return on investment


The company operates at good ROIC (14.5%) and ROE (16.1%). ROIC decreased on 3.3 pp from 17.8% to 14.5% in FY2016. ROE decreased on 6.9 pp from 23.0% to 16.1% in FY2016. ROE followed a declining trend at -7.7 pp per annum in FY2012-FY2016.

Leverage (Debt)


Company's Net Debt / EBITDA is 1.1x and Debt / EBITDA is 1.9x. Net Debt / EBITDA dropped on 0.1x from 1.2x to 1.1x in FY2016. Debt decreased on 4.2% while cash increased on 2.4%. Net Debt/EBITDA stuck to a declining trend at -0.2x per annum in the last 5 years.

Tata Motors has no short term refinancing risk: cash is higher than short term debt (145.7%).

Valuation and dividends


The company's trades at EV/EBITDA 1.5x and P/E 1.3x while industy averages are 17.8x and 21.9x. Tata Motors's EV/(EBITDA-CAPEX) is 9.9x with the industry average at 22.8x.

Management team


Guenter Butschek is a the company's CEO. Guenter Butschek has spent 4 years with the company.

Financial and operational results


Tata Motors ($TATAMOTORS) key annual financial indicators

mln. INR201220132014201520162016/2015
P&L
Revenue1,627,9341,848,4792,279,4592,585,4252,702,5964.5%
EBITDA200,383224,942307,838372,648383,0482.8%
Net Income135,16598,926139,910139,863110,238-21.2%
Balance Sheet
Cash164,769198,109294,593321,158328,8002.4%
Short Term Debt232,652259,536205,457216,158225,7354.4%
Long Term Debt279,625321,553452,586560,713518,763-7.5%
Cash flow
Capex138,756188,626269,751319,622326,8212.3%
Ratios
Revenue growth35.7%13.5%23.3%13.4%4.5%
EBITDA growth29.5%12.3%36.9%21.1%2.8%
EBITDA Margin12.3%12.2%13.5%14.4%14.2%-0.2%
Net Income Margin8.3%5.4%6.1%5.4%4.1%-1.3%
CAPEX, % of revenue8.5%10.2%11.8%12.4%12.1%-0.3%
ROIC20.1%16.6%17.2%17.8%14.5%-3.3%
ROE52.1%28.1%27.1%23.0%16.1%-6.9%
Net Debt/EBITDA1.7x1.7x1.2x1.2x1.1x-0.1x

Peers in Commercial Vehicles


Below we provide Tata Motors benchmarking against other companies in Commercial Vehicles 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
Ashok Leyland ($ASHOKLEY)--3.3%-8.0%33.6%36.0%
V.S.T.Tillers Tractors ($VSTTILLERS)--9.2%29.6%-11.6%17.2%
Beml ($BEML)-3.2%3.7%-3.5%6.3%
Hmt ($HMT)--15.9%-23.9%2.2%2.5%
Trf ($TRF)--16.0%5.4%-4.2%-0.3%
 
Median (5 companies)18.2%-12.6%-2.2%-3.8%6.3%
Tata Motors ($TATAMOTORS)-13.5%23.3%13.4%4.5%


Top companies by EBITDA margin, %

Top 5 FY2012 FY2013 FY2014 FY2015 FY2016
V.S.T.Tillers Tractors ($VSTTILLERS)14.0%15.1%19.2%19.1%17.5%
Ashok Leyland ($ASHOKLEY)9.7%7.0%4.1%10.7%14.3%
Brady & Morris Engineering Co ($BRADYM)---6.9%-
Stone India ($STONEIN)---4.7%-
Cranex ($CRANEX)---4.3%-
 
Median (12 companies)8.0%2.8%4.1%0.8%4.4%
Tata Motors ($TATAMOTORS)12.3%12.2%13.5%14.4%14.2%


Top companies by CAPEX/Revenue, %

Top 5 FY2012 FY2013 FY2014 FY2015 FY2016
V.S.T.Tillers Tractors ($VSTTILLERS)2.4%6.7%5.9%4.1%0.9%
Abg Shipyard ($ABGSHIP)21.0%9.1%15.2%3.7%-
Ashok Leyland ($ASHOKLEY)5.4%5.2%3.6%1.6%1.3%
Beml ($BEML)4.4%4.8%1.5%1.5%0.8%
Cranex ($CRANEX)---1.0%-
 
Median (8 companies)3.4%5.0%2.5%1.2%1.0%
Tata Motors ($TATAMOTORS)8.5%10.2%11.8%12.4%12.1%


Top companies by ROIC, %

Top 5 FY2012 FY2013 FY2014 FY2015 FY2016
V.S.T.Tillers Tractors ($VSTTILLERS)36.4%29.3%41.0%28.0%25.2%
Ashok Leyland ($ASHOKLEY)12.2%5.8%-0.5%7.6%15.7%
Cranex ($CRANEX)5.5%5.3%5.2%5.3%-
Beml ($BEML)2.6%-2.9%1.9%0.6%2.7%
Gujarat Apollo Industries ($GUJAPOLLO)14.5%11.0%-4.5%-2.2%-2.3%
 
Median (12 companies)10.6%5.8%1.2%0.6%2.7%
Tata Motors ($TATAMOTORS)20.1%16.6%17.2%17.8%14.5%


Top companies by Net Debt / EBITDA

Top 5 FY2012 FY2013 FY2014 FY2015 FY2016
Trf ($TRF)5.2x-36.0x-19.0x
Beml ($BEML)5.8x-8.0x6.9x3.4x
Ashok Leyland ($ASHOKLEY)2.5x5.0x17.8x5.0x3.1x
Brady & Morris Engineering Co ($BRADYM)-1.5x-0.0x0.0x
Stone India ($STONEIN)3.1x3.5x0.0x0.0x0.0x
 
Median (6 companies)3.9x2.5x9.0x2.5x1.6x
Tata Motors ($TATAMOTORS)1.7x1.7x1.2x1.2x1.1x


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