Lloyd Electric & Engineering is an attractive stock for a growth investor

06-06-2016 • About Lloyd Electric & Engineering ($LLOYDELENG) • By InTwits

Have you thought about Lloyd Electric & Engineering as a growth stock? It showed noticeble revenue performance in the last years among with attractive profitability and financial model.

Growth story

Lloyd Electric & Engineering showed fast growth in the last financial year. The company's revenue surged on 27.3% in FY2016. EBITDA also increased considerably: 31.5% for the same period.

If we look for the longer period the company showed fast revenue growth of 23.3% from FY2013 to FY2016 annually. EBITDA surged on 24.2% from FY2013 to FY2016 annually.

Lloyd Electric & Engineering ($LLOYDELENG) financials for the last 5 years

mln. INR	FY2012	FY2013	FY2014	FY2015	FY2016
Revenue	13,412	14,743	17,760	21,727	27,663
Revenue growth, %		9.9%	20.5%	22.3%	27.3%
SG&A, %					1.94%
EBITDA	1,208	1,592	1,711	2,322	3,053
EBITDA growth, %		31.8%	7.5%	35.7%	31.5%
EBITDA margin, %	9.01%	10.8%	9.64%	10.7%	11.0%
Net Income	351	528	891	884	419
Net Income margin, %	2.62%	3.58%	5.02%	4.07%	1.52%

CAPEX	374	371	615	277	551
CAPEX/Revenue, %	2.79%	2.52%	3.46%	1.28%	1.99%
Debt	4,188	4,999	6,940	7,983	8,980
Cash	294	209	543	637	737
Net Debt/EBITDA	3.2x	3.0x	3.7x	3.2x	2.7x

ROIC, %	10.0%	12.4%	11.3%	13.1%	15.8%
ROE, %	7.5%	10.0%	15.0%	12.7%	5.5%

Profitability and return on investment

EBITDA growth was partly attributed to margin expansion. EBITDA margin increased slightly on 0.300 pp from 10.7% to 11% in FY2016. In the last 3 years Lloyd Electric & Engineering's EBITDA margin increased slightly on 0.200 pp from 10.8% in FY2013 to 11% in FY2016.

We call Lloyd Electric & Engineering an attractive growth stock as together with the growth it delivers high ROIC at 15.8%. During the last three years it surged - it was 12.4% in FY2013. It's average ROIC for the last three years was 13.4%.

Lloyd Electric & Engineering's Net Income margin dropped on 2.60 pp from 4.10% to 1.50% in FY2016. In the last 3 years Lloyd Electric & Engineering's Net Income margin dropped on 2.10 pp from 3.60% in FY2013 to 1.50% in FY2016.

Lloyd Electric & Engineering operates at ROE of 5.46%. It's average ROE for the last three years was 11.0%.

Capital expenditures (CAPEX)

The company's CAPEX/Revenue was 1.99% in FY2016. CAPEX/Revenue dropped on 0.524 pp from 2.52% in FY2013 to 1.99% in FY2016. It's average level of CAPEX/Revenue for the last three years was 2.24%.

Leverage (Debt)

Having such a fast growth profile Lloyd Electric & Engineering keeps medium debt level at 2.7x Net Debt/EBITDA. In the longer period leverage dropped on 0.31x from 3.01x in FY2013 to 2.70x in FY2016.

Peers in Industrial Machinery

Below we provide Lloyd Electric & Engineering benchmarking against other companies in Industrial Machinery 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
Batliboi ($BATLIBOI)				-54.5%	74.2%
Wpil ($WPIL)		38.4%	0.3%	-5.5%	51.3%
Manugraph India ($MANUGRAPH)		-17.4%	-19.8%	-14.6%	22.6%
Isgec Heavy Engineering ($SARASIND)		-3.8%			14.2%
Abc Bearings ($ABCBEARS)		-15.5%	-6.6%	15.7%	10.3%

Median (24 companies)	10.7%	2.3%	1.6%	2.8%	4.1%
Lloyd Electric & Engineering ($LLOYDELENG)		9.9%	20.5%	22.3%	27.3%

Top companies by Gross margin, %

Top
	FY2012	FY2013	FY2014	FY2015	FY2016
Bell Agromachina ($BELAGRO)	0.0%	0.0%	0.0%	0.0%	0.0%

Median (1 company)	0.0%	0.0%	0.0%	0.0%	0.0%

Top companies by EBITDA margin, %

Top 5
	FY2012	FY2013	FY2014	FY2015	FY2016
Texmaco Infrastructure & Holdings ($TEXINFRA)				40.5%
Dhp India ($DHPIND)				26.3%
Shilp Gravures ($SHILGRAVQ)				19.4%
Solitaire Machine Tools ($SOLIMAC)				19.4%
Wendt (India) ($WENDT)	28.3%	21.6%	18.6%	19.0%	16.5%

Median (46 companies)	11.4%	9.6%	10.7%	10.5%	9.7%
Lloyd Electric & Engineering ($LLOYDELENG)	9.0%	10.8%	9.6%	10.7%	11.0%

Top companies by CAPEX/Revenue, %

Top 5
	FY2012	FY2013	FY2014	FY2015	FY2016
Texmaco Infrastructure & Holdings ($TEXINFRA)				14.0%
Shakti Pumps (India) ($SHAKTIPUMP)	5.8%	19.0%	6.1%	9.9%	7.5%
Wendt (India) ($WENDT)	13.5%	9.0%	8.8%	9.4%	9.3%
Ingersoll-Rand (India) ($INGERRAND)	4.3%	10.9%	3.6%	9.2%	6.7%
Kabra Extrusiontechnik ($KABRAEXTRU)	6.5%	1.8%	0.5%	8.8%	16.2%

Median (23 companies)	5.8%	4.5%	2.9%	3.3%	3.4%
Lloyd Electric & Engineering ($LLOYDELENG)	2.8%	2.5%	3.5%	1.3%	2.0%

Top companies by ROIC, %

Top 5
	FY2012	FY2013	FY2014	FY2015	FY2016
Greaves Cotton ($GREAVESCOT)		24.8%	16.3%	26.7%	25.7%
Honda Siel Power Products ($HONDAPOWER)	16.9%	8.8%	11.5%	15.3%	18.3%
Lakshmi Machine Works ($LAXMIMACH)	18.0%	11.7%	16.2%	17.6%	18.2%
Kabra Extrusiontechnik ($KABRAEXTRU)			11.9%	13.9%	17.0%
Ion Exchange (India) ($IONEXCHANG)	11.0%	15.1%	8.8%	13.1%	16.4%

Median (44 companies)	13.1%	11.4%	10.2%	13.0%	10.4%
Lloyd Electric & Engineering ($LLOYDELENG)	10.0%	12.4%	11.3%	13.1%	15.8%

Top companies by Net Debt / EBITDA

Top 5
	FY2012	FY2013	FY2014	FY2015	FY2016
Wpil ($WPIL)	2.4x	2.3x	2.2x	0.8x	5.4x
Kirloskar Brothers ($KIRLOSBROS)	2.4x	1.3x	1.1x	1.5x	4.7x
Forbes & Company ($FORBESCO)	2.2x	3.3x	4.7x	6.3x	4.3x
Elecon Engineering Co ($ELECON)	3.0x	3.2x	4.0x	3.1x	3.9x
Dynamatic Technologies ($DYNAMATECH)	5.0x	4.1x	3.4x	2.7x	3.8x

Median (34 companies)	1.1x	1.5x	0.0x	0.0x	0.0x
Lloyd Electric & Engineering ($LLOYDELENG)	3.2x	3.0x	3.7x	3.2x	2.7x

Lloyd Electric & Engineering stock price chart

Lloyd Electric & Engineering financials

mln.	FY2010	FY2011	FY2012

Revenue	8,171	10,149	13,412
EBITDA	819.7	911.2	1,208
Net income	338.1	375.7	351.2
CAPEX	398.0	446.1	374.2
Debt	2,580	3,844	4,188
Cash	127.3	154.0	294.3

About Lloyd Electric & Engineering

Lloyd Electric & Engineering Limited manufactures and sells heat exchangers and evaporator coils for heating, ventilation, air-conditioning (AC), and refrigeration industry primarily in India. The company offers fin and tube type heat exchangers used in various applications, such as commercial refrigeration systems, automobile-buses/car AC, railway and marine AC, telecom/mainframe AC, and special application coils, as well as window, split, and package AC systems; packaged AC units, including the AC units for passenger coaches and locomotives in the railway industry; window/split air conditioners; oil coolers for railways; and heavy automobile and tube mill for MB radiators. It is also involved in the design, manufacture, supply, installation, and maintenance of dry coolers used in various segments, such as thermal power plants, nuclear power plants, industrial water cooling segments, oil cooling segments, cement industry, textile industry, etc. In addition, the company offers return bands, distributors, and suction/discharge lines of various sizes; and manufactures air conditioners for various brands on original equipment manufacturing and ODM basis, as well as under its own LLOYD brand. Further, it offers air conditioners, LED TVs, refrigerators, washing machines, chest freezers, water dispensers, induction cookers, room heaters, and other products; and trades in air conditioners, as well as consumer durable products, including LCD/LED products, chest freezers, etc. under the LLOYD brand. The company also exports its products primarily to the Middle East, Africa, Europe, and North America. Lloyd Electric & Engineering Limited was incorporated in 1987 and is headquartered in New Delhi, India.