Ultramarine & Pigments is an attractive stock for a growth investor
03-06-2016 • About Ultramarine & Pigments (
$ULTRAMAR) • By InTwits
Pay attention to Ultramarine & Pigments as a growth stock. Its revenue performance, profitability and healthy financial model stands it out vs. other public companies on the market.
Growth story
Ultramarine & Pigments showed fast growth in the last financial year. The company's revenue surged on 27.7% in FY2016. EBITDA also increased considerably: 27.8% for the same period.
In the last 3 years Ultramarine & Pigments showed fast revenue growth of 16.1% from FY2013 to FY2016 annually. EBITDA surged on 20.0% from FY2013 to FY2016 annually.
Ultramarine & Pigments ($ULTRAMAR) financials for the last 5 years
| mln. INR | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Revenue | 1,360 | 1,402 | 1,502 | 1,716 | 2,192 |
|---|
| Revenue growth, % | | 3.0% | 7.2% | 14.2% | 27.7% |
|---|
| SG&A, % | | | | | |
|---|
| EBITDA | 245 | 218 | 261 | 294 | 376 |
|---|
| EBITDA growth, % | | -11.3% | 20.1% | 12.7% | 27.8% |
|---|
| EBITDA margin, % | 18.0% | 15.5% | 17.4% | 17.2% | 17.2% |
|---|
| Net Income | 137 | 121 | 144 | 187 | 274 |
|---|
| Net Income margin, % | 10.1% | 8.65% | 9.58% | 10.9% | 12.5% |
|---|
| |
| CAPEX | 103 | 36 | 52 | 28 | 169 |
|---|
| CAPEX/Revenue, % | 7.57% | 2.53% | 3.45% | 1.65% | 7.73% |
|---|
| Debt | 96 | 61 | 20 | 0 | 0 |
|---|
| Cash | 44 | 45 | 42 | 145 | 67 |
|---|
| Net Debt/EBITDA | 0.2x | 0.1x | -0.1x | -0.5x | -0.2x |
|---|
| |
| ROIC, % | 20.0% | 16.3% | 20.8% | 25.7% | 30.2% |
|---|
| ROE, % | 17.1% | 14.4% | 16.1% | 19.6% | 25.6% |
|---|
Profitability and return on investment
EBITDA margin hasn't changed. It stayed at 17.2% in FY2016. In the longer period Ultramarine & Pigments showed fast EBITDA margin growth of 1.70 pp from 15.5% in FY2013 to 17.2% in FY2016.
We call Ultramarine & Pigments an attractive growth stock as together with the growth it delivers high ROIC at 30.2%. Three years ago it was considerably lower at 16.3%. Average ROIC for the last three years was 25.6%.
Ultramarine & Pigments's Net Income margin surged on 1.60 pp from 10.9% to 12.5% in FY2016. In the longer period the company showed fast Net Income margin growth of 3.80 pp from 8.70% in FY2013 to 12.5% in FY2016.
Ultramarine & Pigments operates at ROE of 25.6%. It's average level of ROE for the last three years was 20.4%.
Capital expenditures (CAPEX)
To fuel this fast growth Ultramarine & Pigments had to invest in CAPEX.The company's CAPEX/Revenue was 7.73% in FY2016. CAPEX/Revenue surged on 5.20 pp from 2.53% in FY2013 to 7.73% in FY2016. It's average CAPEX/Revenue for the last three years was 4.28%.
Leverage (Debt)
The company has negative net debt at -0.2x Net Debt/EBITDA - at the same time with high growth. In the last 3 years the company showed big decline in leverage of 0.25x from 0.08x in FY2013 to -0.18x in FY2016.
Valuation vs. comparable companies
At the end of trading day today Ultramarine & Pigments traded at 9.7x EV/EBITDA which is 60.7% lower than 24.5x Specialty Chemicals peer group avearge calculated on the basis of 76 companies. The company trades at 13.5x P/E which is 16.4% lower than 16.2x Specialty Chemicals industry avearge calculated based on 12 companies.
For capital intensive compnanies it's worth taking a look at EV/(EBITDA-CAPEX) multiple. The company trades at 17.6x EV/(EBITDA-CAPEX) which is not surprisingly 346% higher than 3.9x Specialty Chemicals industry avearge calculated based on 8 companies.
Peers in Specialty Chemicals
Below you can find Ultramarine & Pigments benchmarking vs. other companies in Specialty Chemicals 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, %
| FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Top 5 |
|---|
| Black Rose Industries ($BLACKROSE) | | 30.6% | -5.6% | 70.0% | -10.0% |
| Kiri Industries ($KIRIINDUS) | 7.9% | -86.5% | 24.8% | 34.7% | |
| Vidhi Dyestuffs Manufacturing ($VIDHIDYE) | | 4.7% | 19.5% | 30.0% | -1.4% |
| Keltech Energies ($KELENRG) | | -13.4% | -0.4% | 24.4% | -6.3% |
| Dai-Ichi Karkaria ($DAICHI) | | 31.4% | 45.4% | 22.8% | -36.4% |
| |
|---|
| Median (29 companies) | 17.4% | 14.1% | 13.7% | 10.9% | -1.4% |
|---|
| Ultramarine & Pigments ($ULTRAMAR) | | 3.0% | 7.2% | 14.2% | 27.7% |
Top companies by EBITDA margin, %
| FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Top 5 |
|---|
| Vinati Organics ($VINATIORGA) | 21.7% | 21.8% | 22.7% | 24.9% | 32.8% |
| Indian Toners & Developers ($INDTONER) | | | | 22.6% | |
| Solar Industries India ($SOLARINDS) | 18.5% | 17.5% | 17.9% | 19.3% | 19.3% |
| Anil ($ANILLTD) | 18.1% | 16.9% | 17.1% | 17.4% | 16.2% |
| Camlin Fine Sciences ($CAMLINFIN) | 9.1% | 12.8% | 12.8% | 16.7% | 18.8% |
| |
|---|
| Median (34 companies) | 9.4% | 10.5% | 10.6% | 10.5% | 15.3% |
|---|
| Ultramarine & Pigments ($ULTRAMAR) | 18.0% | 15.5% | 17.4% | 17.2% | 17.2% |
Top companies by CAPEX/Revenue, %
| FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Top 5 |
|---|
| Plastiblends India ($PLASTIBLEN) | 2.1% | 1.9% | 0.9% | 4.0% | 15.6% |
| Camlin Fine Sciences ($CAMLINFIN) | 4.3% | 5.7% | 7.1% | 5.1% | 13.7% |
| Vinati Organics ($VINATIORGA) | 13.6% | 28.2% | 4.2% | 7.4% | 12.1% |
| Dai-Ichi Karkaria ($DAICHI) | 3.2% | | | 1.6% | 10.3% |
| Solar Industries India ($SOLARINDS) | 13.0% | 9.9% | 12.3% | 10.3% | 9.6% |
| |
|---|
| Median (14 companies) | 4.9% | 4.7% | 4.5% | 5.2% | 8.7% |
|---|
| Ultramarine & Pigments ($ULTRAMAR) | 7.6% | 2.5% | 3.4% | 1.7% | 7.7% |
Top companies by ROIC, %
| FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Top 5 |
|---|
| Vinati Organics ($VINATIORGA) | 29.6% | 26.2% | 30.6% | 34.8% | 32.2% |
| Camlin Fine Sciences ($CAMLINFIN) | 11.1% | 17.8% | 24.2% | 29.5% | 23.3% |
| Pidilite Industries ($PIDILITIND) | 27.4% | 29.3% | 29.8% | 29.0% | 38.3% |
| Adi Finechem ($ADIFINCHM) | 30.6% | 29.8% | 46.4% | 26.3% | 20.6% |
| Plastiblends India ($PLASTIBLEN) | 18.3% | 15.8% | 24.0% | 24.5% | 22.8% |
| |
|---|
| Median (37 companies) | 14.7% | 14.5% | 11.1% | 16.7% | 21.2% |
|---|
| Ultramarine & Pigments ($ULTRAMAR) | 20.0% | 16.3% | 20.8% | 25.7% | 30.2% |
Top companies by Net Debt / EBITDA
| FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Top 5 |
|---|
| Kiri Industries ($KIRIINDUS) | 8.2x | 31.3x | 10.6x | 7.7x | |
| Jayant Agro-Organics ($JAYAGROGN) | 2.8x | 3.1x | 4.6x | 6.5x | 3.4x |
| Anil ($ANILLTD) | 2.2x | 3.4x | 3.8x | 4.0x | 4.2x |
| Oricon Enterprises ($ORICON) | 1.2x | 1.0x | 1.7x | 3.2x | |
| Sudarshan Chemical Industries ($SUDARSCHEM) | 2.4x | 5.1x | 3.2x | 3.2x | 2.4x |
| |
|---|
| Median (32 companies) | 1.5x | 1.8x | 1.7x | 0.0x | 0.0x |
|---|
| Ultramarine & Pigments ($ULTRAMAR) | 0.2x | 0.1x | -0.1x | -0.5x | -0.2x |
