Kennametal India reports 149% CAPEX growth in 2016 and almost no change in Revenue of 5,703
09-08-2016 • About Kennametal India (
$KENNAMET) • By InTwits
Kennametal India reported FY2016 financial results today. Overall the company's long term financial model is characterised by the following facts:
- EBITDA Margin is quite volatile: 8.8% in FY2016, 10.6% in FY2015, 9.2% in FY2014, 7.9% in FY2013, 20.2% in FY2012
- Kennametal India has medium CAPEX intensity: 5 year average CAPEX/Revenue was 5.1%. At the same time it's in pair with industry average of 5.5%
- CAPEX is quite volatile: ₹435m in FY2016, ₹174m in FY2015, ₹79m in FY2014, ₹241m in FY2013, ₹479m in FY2012
- The company has business model with low profitability: ROIC is 7.2%
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 showed almost no change in FY2016. Despite revenue decline the EBITDA margin expanded. EBITDA Margin increased slightly on 0.50 pp from 3.7% to 4.2% in FY2016.
Net Income margin decreased on 2.2 pp from 5.9% to 3.6% in FY2016.
Investments (CAPEX, working capital and M&A)
In FY2016 Kennametal India had CAPEX/Revenue of 7.6%. Kennametal India's CAPEX/Revenue increased on 2.7 pp from 4.9% in FY2013 to 7.6% in FY2016. It's average level of CAPEX/Revenue for the last three years was 4.0%. Kennametal India invested a large share of EBITDA (86.4%) to CAPEX. During the last 5 years CAPEX as a % of Revenue bottomed in FY2014 at 1.5% and was growing since that time.
Return on investment
The company operates at low ROIC (7.2%) and ROE (5.6%). ROIC decreased on 2.8 pp from 10.0% to 7.2% in FY2016. ROE decreased on 4.0 pp from 9.6% to 5.6% in FY2016.
Leverage (Debt)
The company has no debt. Cash dropped on 31.4%.
Valuation and dividends
Kennametal India's trades at EV/EBITDA 27.4x and P/E 69.5x while industy averages are 17.8x and 21.9x. Kennametal India's EV/(EBITDA-CAPEX) is 201.8x with the industry average at 22.8x.
Management team
The company's CEO Bhagya Chandra Rao has spent 8 years with the company.
Financial and operational results
Kennametal India ($KENNAMET) key annual financial indicators| mln. INR | 2012 | 2013 | 2014 | 2015 | 2016 | 2016/2015 |
|---|
P&L
|
|---|
| Revenue | 5,552 | 4,898 | 5,451 | 5,703 | 5,703 | 0.0% |
| EBITDA | 1,119 | 388 | 500 | 606 | 503 | -17.0% |
| Net Income | 684 | 149 | 171 | 335 | 207 | -38.1% |
Balance Sheet
|
|---|
| Cash | 447 | 536 | 566 | 948 | 650 | -31.4% |
| Short Term Debt | 0 | 0 | 0 | 0 | 0 | |
| Long Term Debt | 0 | 0 | 0 | 0 | 0 | |
Cash flow
|
|---|
| Capex | 479 | 241 | 79 | 174 | 435 | 149.3% |
Ratios
|
|---|
| Revenue growth | 10.7% | -11.8% | 11.3% | 4.6% | 0.0% | |
| EBITDA growth | -19.1% | -65.4% | 28.9% | 21.2% | -17.0% | |
|
|---|
| EBITDA Margin | 20.2% | 7.9% | 9.2% | 10.6% | 8.8% | -1.8% |
| Net Income Margin | 12.3% | 3.0% | 3.1% | 5.9% | 3.6% | -2.2% |
| CAPEX, % of revenue | 8.6% | 4.9% | 1.5% | 3.1% | 7.6% | 4.6% |
|
|---|
| ROIC | 29.6% | 3.9% | 7.1% | 10.0% | 7.2% | -2.8% |
| ROE | 22.9% | 4.8% | 5.3% | 9.6% | 5.6% | -4.0% |
| Net Debt/EBITDA | -0.4x | -1.4x | -1.1x | -1.6x | -1.3x | 0.3x |
Peers in Industrial Machinery
Below you can find Kennametal India benchmarking vs. other companies in Industrial Machinery 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 |
|---|
| Batliboi ($BATLIBOI) | - | - | - | -54.5% | 74.2% |
| Wpil ($WPIL) | - | 38.4% | 0.3% | -5.5% | 51.3% |
| Revathi Equipment ($REVATHI) | - | 10.3% | -19.9% | -7.2% | 50.3% |
| Nitin Fire Protection Industries ($NITINFIRE) | - | 31.5% | 44.2% | 12.2% | 29.8% |
| Lloyd Electric & Engineering ($LLOYDELENG) | - | - | - | 22.3% | 27.3% |
| |
|---|
| Median (28 companies) | -5.4% | 2.3% | 0.3% | 2.8% | 6.8% |
|---|
| Kennametal India ($KENNAMET) | - | -11.8% | 11.3% | 4.6% | 0.0% |
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) | 11.3% | 10.0% | 10.7% | 10.5% | 10.4% |
|---|
| Kennametal India ($KENNAMET) | 20.2% | 7.9% | 9.2% | 10.6% | 8.8% |
Top companies by CAPEX/Revenue, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Kabra Extrusiontechnik ($KABRAEXTRU) | 6.5% | 1.8% | 0.5% | 8.8% | 16.2% |
| Wpil ($WPIL) | 2.0% | 9.1% | 2.9% | 1.2% | 12.7% |
| Nitin Fire Protection Industries ($NITINFIRE) | 3.0% | 4.9% | 2.6% | 2.4% | 11.6% |
| Wendt (India) ($WENDT) | 13.5% | 9.0% | 8.8% | 9.4% | 9.3% |
| Shakti Pumps (India) ($SHAKTIPUMP) | 5.8% | 19.0% | 6.1% | 9.9% | 7.5% |
| |
|---|
| Median (19 companies) | 5.6% | 4.4% | 3.0% | 3.3% | 3.4% |
|---|
| Kennametal India ($KENNAMET) | 8.6% | 4.9% | 1.5% | 3.1% | 7.6% |
Top companies by ROIC, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Greaves Cotton ($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 (52 companies) | 12.8% | 11.4% | 10.8% | 13.0% | 10.8% |
|---|
| Kennametal India ($KENNAMET) | 29.6% | 3.9% | 7.1% | 10.0% | 7.2% |
Top companies by Net Debt / EBITDA
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Wpil ($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 (40 companies) | 1.4x | 1.5x | 0.0x | 0.0x | 0.0x |
|---|
| Kennametal India ($KENNAMET) | -0.4x | -1.4x | -1.1x | -1.6x | -1.3x |
