Srei Infrastructure Finance reports 11.0% CAPEX growth in 2016 and 1.3% Revenue growth

05-12-2016 • About Srei Infrastructure Finance ($SREINFRA) • By InTwits

Srei Infrastructure Finance reported FY2016 financial results today. Here are the key drivers of the company's long term financial model:

EBITDA Margin is declining: 72.8% in FY2016 vs. 78.5% in FY2015 vs. 83.2% in FY2012
Srei Infrastructure Finance has high CAPEX intensity: 5 year average CAPEX/Revenue was 12.5%. At the same time it's a lot of higher than industry average of 1.5%.
CAPEX is quite volatile: ₹1,929m in FY2016, ₹1,737m in FY2015, ₹3,947m in FY2014, ₹2,592m in FY2013, ₹7,167m in FY2012
The company has potentially unprofitable business model: ROIC is 0.4%
It operates with high leverage: Net Debt/EBITDA is 8.7x while industry average is 2.7x

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 increased slightly on 1.3%. Revenue decline was accelerating on average at -11.4 pp per annum in the last 5 years. Revenue growth was financed by EBITDA margin decline. EBITDA Margin decreased on 5.6 pp from 78.5% to 72.8% in FY2016. EBITDA Margin declined at -2.8 pp per annum in the last 5 years.

Net Income margin decreased slightly on 1.8 pp from 4.1% to 2.2% in FY2016. During FY2012-FY2016 Net Income margin topped in FY2013 at 8.6% and was declining since that time.

Investments (CAPEX, working capital and M&A)

In FY2016 the company had CAPEX/Revenue of 6.0%. The company showed decline in CAPEX/Revenue of 2.6 pp from 8.5% in FY2013 to 6.0% in FY2016. Average CAPEX/Revenue for the last three years was 7.9%.

Return on investment

The company operates at low ROIC (0.4%) and ROE (2.0%). ROE decreased slightly on 1.7 pp from 3.7% to 2.0% in FY2016. During FY2012-FY2016 ROE topped in FY2013 at 8.0% and was declining since that time.

Leverage (Debt)

Company's Net Debt / EBITDA is 8.7x and Debt / EBITDA is 8.8x. Net Debt / EBITDA jumped on 0.7x from 8.0x to 8.7x in FY2016. Debt increased slightly on 1.7% while cash dropped on 41.1%. During FY2012-FY2016 Net Debt/EBITDA bottomed in FY2013 at 6.2x and was growing since that time.

Srei Infrastructure Finance has short term refinancing risk: cash is only 1.2% of short term debt.

Management team

Srei Infrastructure Finance's CFO is Kishore Kumar Lodha. Kishore Kumar Lodha has 6 years tenure at the company.

Financial and operational results

Srei Infrastructure Finance ($SREINFRA) key annual financial indicators

mln. INR	2012	2013	2014	2015	2016	2016/2015
P&L
Revenue	23,714	30,448	32,014	31,954	32,378	1.3%
EBITDA	19,729	26,101	26,143	25,070	23,587	-5.9%
Net Income	1,114	2,632	1,385	1,302	725	-44.3%
Balance Sheet
Cash	2,305	1,532	2,635	2,840	1,673	-41.1%
Short Term Debt	83,088	94,912	126,636	135,216	144,352	6.8%
Long Term Debt	57,276	67,540	71,037	68,042	62,375	-8.3%
Cash flow
Capex	7,167	2,592	3,947	1,737	1,929	11.0%
Ratios
Revenue growth	44.0%	28.4%	5.1%	-0.2%	1.3%
EBITDA growth	53.5%	32.3%	0.2%	-4.1%	-5.9%

EBITDA Margin	83.2%	85.7%	81.7%	78.5%	72.8%	-5.6%
Net Income Margin	4.7%	8.6%	4.3%	4.1%	2.2%	-1.8%
CAPEX, % of revenue	30.2%	8.5%	12.3%	5.4%	6.0%	0.5%

ROIC					0.4%
ROE	3.6%	8.0%	4.0%	3.7%	2.0%	-1.7%
Net Debt/EBITDA	7.0x	6.2x	7.5x	8.0x	8.7x	0.7x

Peers in Finance (including NBFCs)

Below we provide Srei Infrastructure Finance benchmarking against other companies in Finance (including NBFCs) 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
Sks Microfinance ($SKSMICRO)	-	-25.6%	55.0%	47.3%	64.5%
Motilal Oswal Financial Services ($MOTILALOFS)	-	0.4%	-0.9%	64.7%	39.8%
K.Z.Leasing & Finance ($KZLFIN)	-	41.6%	-	-	26.5%
Bajaj Finserv ($BAJAJFINSV)	-	28.1%	18.8%	26.8%	23.9%
Muthoot Capital Services ($MUTHTFN)	-	59.3%	48.1%	20.5%	19.5%
Median (26 companies)	-	24.4%	20.8%	14.3%	8.2%
Srei Infrastructure Finance ($SREINFRA)	-	28.4%	5.1%	-0.2%	1.3%

Top companies by EBITDA margin, %


Top 5	FY2012	FY2013	FY2014	FY2015	FY2016
Microse India ($MICROSE)	-	-	-	101.1%	-
Pnb Gilts ($PNBGILTS)	94.0%	96.4%	96.4%	96.1%	95.4%
Jsw Holdings ($JSWHL)	-	-	-	93.8%	-
Rural Electrification Corporation ($RECLTD)	97.2%	97.3%	96.7%	93.3%	92.0%
Bajaj Holdings & Investment ($BAJAJHLDNG)	96.1%	95.4%	92.3%	92.7%	91.4%
Median (51 companies)	64.8%	65.4%	65.5%	59.4%	60.5%
Srei Infrastructure Finance ($SREINFRA)	83.2%	85.7%	81.7%	78.5%	72.8%

Top companies by CAPEX/Revenue, %


Top 5	FY2012	FY2013	FY2014	FY2015	FY2016
IDFC Limited ($IDFC)	0.1%	0.1%	0.2%	0.5%	4.8%
Bengal & Assam Company ($BENGALASM)	15.9%	4.5%	1.2%	2.1%	4.1%
Motilal Oswal Financial Services ($MOTILALOFS)	15.5%	5.3%	1.7%	3.4%	2.5%
Cholamandalam Investment And Finance Company ($CHOLAFIN)	1.8%	1.4%	0.8%	0.8%	1.8%
Reliance Capital ($RELCAPITAL)	2.0%	0.7%	2.5%	1.0%	1.6%
Median (18 companies)	0.6%	0.7%	0.9%	0.7%	1.0%
Srei Infrastructure Finance ($SREINFRA)	30.2%	8.5%	12.3%	5.4%	6.0%

Top companies by ROIC, %


Top 5	FY2012	FY2013	FY2014	FY2015	FY2016
Motilal Oswal Financial Services ($MOTILALOFS)	-	12.0%	9.7%	11.9%	7.8%
Sks Microfinance ($SKSMICRO)	-	-	4.1%	6.6%	7.6%
Nalwa Sons Investments ($NSIL)	-	-	-	-	6.4%
Shriram City Union Finance ($SHRIRAMCIT)	6.1%	5.8%	5.8%	5.7%	4.6%
Rural Electrification Corporation ($RECLTD)	-	4.7%	5.2%	4.7%	4.3%
Median (54 companies)	4.1%	4.4%	4.1%	4.1%	4.2%
Srei Infrastructure Finance ($SREINFRA)	-	-	-	-	0.4%

Top companies by Net Debt / EBITDA


Top 5	FY2012	FY2013	FY2014	FY2015	FY2016
Fortune Financial Services (India) ($FORTUNEF)	9.0x	-	10.8x	8.9x	-0.5x
Pnb Gilts ($PNBGILTS)	14.2x	11.2x	11.3x	8.8x	15.0x
Rural Electrification Corporation ($RECLTD)	8.3x	8.0x	7.5x	8.0x	7.8x
Magma Fincorp ($MAGMA)	7.7x	8.5x	7.0x	7.7x	7.5x
Cholamandalam Investment And Finance Company ($CHOLAFIN)	9.0x	7.9x	7.4x	7.2x	4.9x
Median (47 companies)	4.8x	3.6x	3.4x	0.0x	0.0x
Srei Infrastructure Finance ($SREINFRA)	7.0x	6.2x	7.5x	8.0x	8.7x

Srei Infrastructure Finance stock price chart

Srei Infrastructure Finance financials

mln.	FY2010	FY2011	FY2012

Revenue	9,722	16,463	23,714
EBITDA	7,465	12,851	19,729
Net income	1,559	1,792	1,114
CAPEX	562.1	5,699	7,167
Debt	65,825	83,081	140,364
Cash	999.8	899.2	2,305

About Srei Infrastructure Finance

Srei Infrastructure Finance Limited, a non-banking financial company, provides financial services in India and internationally. It operates through Financial Services and Infrastructure Equipment Services segments. The company provides project financing for power, roads, bridges, highways, port, airport, telecommunication, water supply, waste management, industrial parks and SEZs, agri-infrastructure, warehousing, renewable energy, and other infrastructure sectors; and debt, equity, and mezzanine capital for various infrastructure projects. It also offers infrastructure equipment finance, including leasing and hire purchase of infrastructure, construction equipment, and machineries to various construction companies, and small and medium scale enterprises that are engaged in civil and mechanical construction. In addition, the company provides project advisory services, such as project conceptualization, project structuring, project monitoring, fund mobilization, and advisory services for government and private agencies; project development services; investment banking services, including initial public offerings, delisting, buy-back, open offers, non convertible debenture, bond and private placements of equity, debt syndication, and merger and acquisition advisory services; and insurance broking services. Further, it is engaged in the operation of approximately 5,500 Km of toll based roads; generation, transmission, and distribution of energy in renewable and non-renewable power sectors; rental of infrastructure equipment in construction, oil and gas, and energy sectors; rural IT infrastructure business; development of SEZ and industrial parks; venture capital/fund management activities; and water and waste management business. The company was formerly known as Srei International Finance Limited and changed its name to Srei Infrastructure Finance Limited in August 2004. Srei Infrastructure Finance Limited was incorporated in 1985 and is based in Kolkata, India.