Simplex Infrastructures revenue decreased on 5.3% and EBITDA Margin showed almost no change

31-05-2016 • About Simplex Infrastructures ($SIMPLEXINF) • By InTwits

Simplex Infrastructures reported FY2016 financial results today. Overall the company's long term financial model is characterised by the following facts:

Simplex Infrastructures has low CAPEX intensity: 5 year average CAPEX/Revenue was 2.7%. At the same time it's in pair with industry average of 39.4%
CAPEX is quite volatile: ₹1,826m in FY2016, ₹1,633m in FY2015, ₹1,523m in FY2014, ₹730m in FY2013, ₹2,344m in FY2012
The company has business model with low profitability: ROIC is 10.0%
It operates with high leverage: Net Debt/EBITDA is 5.0x while industry average is 90.3x

Below you can find a comprehensive analysis of the key data driving the company's performance and the stock price.

Revenue and profitability

Simplex Infrastructures's Revenue decreased on 5.3%. Having declining revenue the company managed to increase EBITDA margin. EBITDA Margin increased on 3.6 pp from 16.5% to 20.1% in FY2016. EBITDA Margin stuck to a growing trend at 0.94 pp per annum in the last 5 years.

Net Income margin showed almost no change in FY2016.

Investments (CAPEX, working capital and M&A)

The company's CAPEX/Revenue was 3.1% in FY2016. Simplex Infrastructures's CAPEX/Revenue increased slightly on 1.9 pp from 1.2% in FY2013 to 3.1% in FY2016. For the last three years the average CAPEX/Revenue was 2.8%.

Return on investment

The company operates at low ROIC (10.0%) and ROE (4.5%). ROIC decreased slightly on 0.77 pp from 10.7% to 10.0% in FY2016. ROE increased slightly on 0.53 pp from 3.9% to 4.5% in FY2016.

Leverage (Debt)

Debt level is 5.0x Net Debt / EBITDA and 5.1x Debt / EBITDA. Net Debt / EBITDA increased on 0.1x from 5.0x to 5.0x in FY2016. Debt decreased on 3.1% while cash dropped on 19.6%.

Simplex Infrastructures has short term refinancing risk: cash is only 1.0% of short term debt.

Valuation and dividends

The company's trades at EV/EBITDA 7.1x and P/E 19.6x while industy averages are 17.8x and 21.9x. The company's EV/(EBITDA-CAPEX) is 9.9x with the industry average at 22.8x.

Financial and operational results

Simplex Infrastructures ($SIMPLEXINF) key annual financial indicators

mln. INR	2012	2013	2014	2015	2016	2016/2015
P&L
Revenue	60,098	58,975	56,154	62,024	58,738	-5.3%
EBITDA	4,631	4,722	5,323	6,728	6,445	-4.2%
Net Income	836	533	585	573	684	19.3%
Balance Sheet
Cash	646	754	336	328	264	-19.6%
Short Term Debt	20,438	24,009	25,536	28,276	26,429	-6.5%
Long Term Debt	879	2,768	3,770	5,412	6,208	14.7%
Cash flow
Capex	2,344	730	1,523	1,633	1,826	11.8%
Ratios
Revenue growth	24.6%	-1.9%	-4.8%	10.5%	-5.3%
EBITDA growth	10.2%	2.0%	12.7%	26.4%	-4.2%

EBITDA Margin	7.7%	8.0%	9.5%	10.8%	11.0%	0.1%
Net Income Margin	1.4%	0.9%	1.0%	0.9%	1.2%	0.2%
CAPEX, % of revenue	3.9%	1.2%	2.7%	2.6%	3.1%	0.5%

ROIC	10.7%	8.7%	8.9%	10.7%	10.0%	-0.8%
ROE	7.3%	4.2%	4.3%	3.9%	4.5%	0.5%
Net Debt/EBITDA	4.5x	5.5x	5.4x	5.0x	5.0x	0.1x

Peers in Construction & Engineering

Below you can find Simplex Infrastructures benchmarking vs. other companies in Construction & Engineering industry. It's shown for the period of 5 years for the key financial metrics. Each table has median value for all the companies in the industry together with individual financial data of the top-5 companies in the industry by particular financial metric.

Top companies by Revenue growth, %


Top 5	FY2012	FY2013	FY2014	FY2015	FY2016
Ramky Infrastructure ($RAMKY)	-	-5.0%	-37.9%	-33.6%	44.2%
Shristi Infrastructure Development Corporation ($SHRISTI)	-	-2.1%	-2.3%	1.0%	28.2%
Prakash Constrowell ($PRAKASHCON)	-	19.4%	-3.4%	-26.4%	23.8%
Mbl Infrastructures ($MBLINFRA)	-	7.1%	30.3%	11.1%	19.4%
Skipper ($SKIPPER)	-	21.5%	15.7%	26.0%	14.7%
Median (28 companies)	-11.6%	6.9%	7.1%	-0.0%	-6.6%
Simplex Infrastructures ($SIMPLEXINF)	-	-1.9%	-4.8%	10.5%	-5.3%

Top companies by EBITDA margin, %


Top 5	FY2012	FY2013	FY2014	FY2015	FY2016
Madhucon Projects ($MADHUCON)	8.4%	31.9%	22.1%	32.1%	40.2%
Jaiprakash Associates ($JPASSOCIAT)	36.9%	35.9%	32.4%	31.5%	27.6%
Arss Infrastructure Projects ($ARSSINFRA)	14.0%	13.9%	22.0%	31.3%	-
Reliance Industrial Infrastructure ($RIIL)	-	-	-	30.8%	-
Shristi Infrastructure Development Corporation ($SHRISTI)	27.2%	30.0%	30.0%	29.8%	29.6%
Median (37 companies)	12.4%	11.3%	10.7%	9.9%	10.6%
Simplex Infrastructures ($SIMPLEXINF)	7.7%	8.0%	9.5%	10.8%	11.0%

Top companies by CAPEX/Revenue, %


Top 5	FY2012	FY2013	FY2014	FY2015	FY2016
Shristi Infrastructure Development Corporation ($SHRISTI)	0.0%	11.2%	14.1%	40.8%	25.2%
Jaiprakash Associates ($JPASSOCIAT)	97.0%	65.5%	45.0%	31.6%	18.9%
Supreme Infrastructure India ($SUPREMEINF)	46.6%	31.1%	43.1%	45.8%	14.8%
Mbl Infrastructures ($MBLINFRA)	7.0%	12.7%	11.7%	9.6%	14.8%
Ramky Infrastructure ($RAMKY)	10.6%	11.9%	8.6%	1.4%	6.8%
Median (19 companies)	7.7%	8.6%	6.9%	3.2%	3.5%
Simplex Infrastructures ($SIMPLEXINF)	3.9%	1.2%	2.7%	2.6%	3.1%

Top companies by ROIC, %


Top 5	FY2012	FY2013	FY2014	FY2015	FY2016
Skipper ($SKIPPER)	10.4%	13.5%	14.7%	27.4%	24.4%
Voltas ($VOLTAS)	19.6%	11.7%	11.8%	19.3%	18.2%
Spml Infra ($SPMLINFRA)	8.6%	9.7%	7.1%	10.6%	13.1%
Mbl Infrastructures ($MBLINFRA)	21.3%	13.4%	14.0%	13.6%	11.2%
Madhucon Projects ($MADHUCON)	-2.4%	0.7%	3.8%	7.5%	10.9%
Median (35 companies)	8.6%	7.1%	5.6%	6.6%	6.3%
Simplex Infrastructures ($SIMPLEXINF)	10.7%	8.7%	8.9%	10.7%	10.0%

Top companies by Net Debt / EBITDA


Top 5	FY2012	FY2013	FY2014	FY2015	FY2016
Mcnally Bharat Engineering Company ($MBECL)	4.3x	7.0x	7.6x	28.3x	2,779.7x
Atlanta ($ATLANTA)	10.7x	4.8x	6.4x	7.6x	71.7x
Ramky Infrastructure ($RAMKY)	3.1x	4.6x	-	-	20.6x
Supreme Infrastructure India ($SUPREMEINF)	6.0x	6.1x	6.8x	11.3x	16.2x
Jaiprakash Associates ($JPASSOCIAT)	9.2x	8.9x	11.0x	11.9x	14.1x
Median (25 companies)	4.7x	5.2x	6.4x	2.7x	5.2x
Simplex Infrastructures ($SIMPLEXINF)	4.5x	5.5x	5.4x	5.0x	5.0x

Simplex Infrastructures stock price chart

Simplex Infrastructures financials

mln.	FY2010	FY2011	FY2012

Revenue	76,602	48,238	60,098
EBITDA	5,336	4,202	4,631
Net income	1,271	1,246	836.4
CAPEX	1,210	2,393	2,344
Debt	13,012	16,561	21,317
Cash	938.6	827.5	646.3

About Simplex Infrastructures

Simplex Infrastructures Limited is engaged in the infrastructure construction activities in India and internationally. The company is engaged in building rail infrastructure, including rail tracks, station buildings, bridges, and culverts; and design and construction of high-rise infrastructure comprising multi-storeyed residential towers, institutional/IT buildings, hotels, hospitals, and mass housing projects. It also builds industrial structures, such as steel and power plants; and undertakes greenfield and modernization projects for cement, aluminum, copper, engineering, automobiles, petrochemicals, fertilizers, paper textiles, pharmaceuticals, chemicals, and other industrial plants. In addition, the company is involved in erecting various types of power infrastructures, including thermal, hydel, and nuclear projects; underwater piling, which comprise steel piling; and building bridges across rivers. Further, it provides ground engineering services, such as pre-cast piling and jointed piling; and cast-in-situ, driven, and bored piling, as well as soil investigation, soil compaction, diaphragm walls, grouting, stone columns, etc. Additionally, the company is engaged in the renovation and modernization of airports; provision of oil drilling, wind mill, and real estate services; and the hire of plant and equipment, including oil drilling rig. Simplex Infrastructures Limited was founded in 1924 and is based in Kolkata, India.