Essar Ports reports 125% CAPEX growth in 2016 while 8.4% Revenue decline
08-11-2016 • About Essar Ports (
$ESSARPORTS) • By InTwits
Essar Ports reported FY2016 financial results today. Overall the company's long term financial model is characterised by the following facts:
- Essar Ports is a company in decline: FY2016 revenue growth was -8.4%, 5 years revenue CAGR was -4.5%
- Essar Ports has high CAPEX intensity: 5 year average CAPEX/Revenue was 32.2%. At the same time it's in pair with industry average of 39.3%
- CAPEX is quite volatile: ₹6,409m in FY2016, ₹2,847m in FY2015, ₹183m in FY2014, ₹4,860m in FY2013, ₹7,354m in FY2012
- The company has business model with low profitability: ROIC is 7.9%
- It operates with high leverage: Net Debt/EBITDA is 7.0x while industry average is 5.8x
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 decreased on 8.4%. Having declining revenue the company managed to increase EBITDA margin. EBITDA Margin increased slightly on 1.1 pp from 8.2% to 9.3% in FY2016.
Net Income margin dropped on 19.2 pp from 23.7% to 4.5% in FY2016.
Investments (CAPEX, working capital and M&A)
The company's CAPEX/Revenue was 42.3% in FY2016. CAPEX/Revenue increased on 8.1 pp from 34.2% in FY2013 to 42.3% in FY2016. It's average level of CAPEX/Revenue for the last three years was 20.1%. The company invested a big chunk of EBITDA (58.5%) to CAPEX which didn't stop revenue from falling. During the last 5 years CAPEX as a % of Revenue bottomed in FY2014 at 0.86% and was growing since that time.
Return on investment
The company operates at low ROIC (7.9%) and ROE (2.0%). ROIC decreased on 3.2 pp from 11.1% to 7.9% in FY2016. ROE dropped on 10.1 pp from 12.0% to 2.0% in FY2016. During FY2012-FY2016 ROE topped in FY2013 at 13.5% and was declining since that time.
Leverage (Debt)
Company's Net Debt / EBITDA is 7.0x and Debt / EBITDA is 7.0x. Net Debt / EBITDA jumped on 2.2x from 4.8x to 7.0x in FY2016. Debt surged on 20.2% while cash dropped on 82.2%. During the last 5 years Net Debt/EBITDA bottomed in FY2014 at 4.8x and was growing since that time.
Essar Ports has short term refinancing risk: cash is only 1.3% of short term debt.
Management team
Essar Ports's CEO Rajiv Agarwal has spent 9 years with the company.
Financial and operational results
Essar Ports ($ESSARPORTS) key annual financial indicators| mln. INR | 2012 | 2013 | 2014 | 2015 | 2016 | 2016/2015 |
|---|
P&L
|
|---|
| Revenue | 11,088 | 14,215 | 21,244 | 16,541 | 15,146 | -8.4% |
| EBITDA | 8,986 | 11,413 | 12,393 | 13,028 | 10,956 | -15.9% |
| Net Income | 640 | 3,315 | 3,837 | 3,912 | 675 | -82.7% |
Balance Sheet
|
|---|
| Cash | 162 | 113 | 83 | 1,170 | 208 | -82.2% |
| Short Term Debt | 5,411 | 7,244 | 4,824 | 8,179 | 15,561 | 90.3% |
| Long Term Debt | 49,640 | 50,305 | 54,821 | 55,854 | 61,382 | 9.9% |
Cash flow
|
|---|
| Capex | 7,354 | 4,860 | 183 | 2,847 | 6,409 | 125.1% |
Ratios
|
|---|
| Revenue growth | -42.0% | 28.2% | 49.4% | -22.1% | -8.4% | |
| EBITDA growth | 19.2% | 27.0% | 8.6% | 5.1% | -15.9% | |
|
|---|
| EBITDA Margin | 81.0% | 80.3% | 58.3% | 78.8% | 72.3% | -6.4% |
| Net Income Margin | 5.8% | 23.3% | 18.1% | 23.7% | 4.5% | -19.2% |
| CAPEX, % of revenue | 66.3% | 34.2% | 0.9% | 17.2% | 42.3% | 25.1% |
|
|---|
| ROIC | 9.3% | 10.9% | 10.9% | 11.1% | 7.9% | -3.2% |
| ROE | 2.9% | 13.5% | 13.2% | 12.0% | 2.0% | -10.1% |
| Net Debt/EBITDA | 6.1x | 5.0x | 4.8x | 4.8x | 7.0x | 2.2x |
Peers in Marine Port & Services
Below we provide Essar Ports benchmarking against other companies in Marine Port & Services 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 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Adani Ports And Special Economic Zone ($ADANIPORTS) | - | 32.3% | 31.4% | 28.6% | 18.2% |
| |
|---|
| Median (1 company) | - | 32.3% | 31.4% | 28.6% | 18.2% |
|---|
| Essar Ports ($ESSARPORTS) | - | 28.2% | 49.4% | -22.1% | -8.4% |
Top companies by EBITDA margin, %
| Top | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Adani Ports And Special Economic Zone ($ADANIPORTS) | 68.0% | 68.4% | 65.0% | 67.4% | 68.2% |
| |
|---|
| Median (1 company) | 68.0% | 68.4% | 65.0% | 67.4% | 68.2% |
|---|
| Essar Ports ($ESSARPORTS) | 81.0% | 80.3% | 58.3% | 78.8% | 72.3% |
Top companies by CAPEX/Revenue, %
| Top | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Adani Ports And Special Economic Zone ($ADANIPORTS) | 173.0% | 110.0% | 27.2% | 30.6% | 36.3% |
| |
|---|
| Median (1 company) | 173.0% | 110.0% | 27.2% | 30.6% | 36.3% |
|---|
| Essar Ports ($ESSARPORTS) | 66.3% | 34.2% | 0.9% | 17.2% | 42.3% |
Top companies by ROIC, %
| Top | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Adani Ports And Special Economic Zone ($ADANIPORTS) | 9.7% | 9.7% | 11.7% | 12.1% | 11.3% |
| |
|---|
| Median (1 company) | 9.7% | 9.7% | 11.7% | 12.1% | 11.3% |
|---|
| Essar Ports ($ESSARPORTS) | 9.3% | 10.9% | 10.9% | 11.1% | 7.9% |
Top companies by Net Debt / EBITDA
| Top | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Adani Ports And Special Economic Zone ($ADANIPORTS) | 9.6x | 4.5x | 4.3x | 4.3x | 4.6x |
| |
|---|
| Median (1 company) | 9.6x | 4.5x | 4.3x | 4.3x | 4.6x |
|---|
| Essar Ports ($ESSARPORTS) | 6.1x | 5.0x | 4.8x | 4.8x | 7.0x |
