Nestle India reports 64.5% Net Income growth in 2016 and 0.98 pp EBITDA Margin decline from 19.7% to 18.7%

15-02-2017 • About Nestle India ($NESTLEIND) • By InTwits

Nestle India reported FY2016 financial results today. Here are the key drivers of the company's long term financial model: The company has highly profitable business model: ROIC is 43.7%.

Below you can find a comprehensive analysis of the key data driving the company's performance and the stock price.

Revenue and profitability

Nestle India's Revenue jumped on 12.8%. During FY2012-FY2016 Revenue growth bottomed in FY2015 at -17.2%. Having declining revenue the company managed to increase EBITDA margin. EBITDA Margin increased on 5.6 pp from 23.5% to 29.1% in FY2016. EBITDA Margin declined at -0.86 pp per annum in the last 5 years.

Net Income margin increased on 3.2 pp from 6.9% to 10.1% in FY2016. During FY2012-FY2016 Net Income margin bottomed in FY2015 at 6.9%.

Return on investment

The company operates at high and attractive ROIC (43.7%) and ROE (31.8%). ROIC increased on 3.5 pp from 40.2% to 43.7% in FY2016. ROE jumped on 11.9 pp from 19.9% to 31.8% in FY2016. ROE declined at -10.9 pp per annum in the last 5 years.

Leverage (Debt)

Company's Net Debt / EBITDA is -0.5x and Debt / EBITDA is 0.0x. Debt surged on 87.0% while cash surged on 76.2%.

The company has no short term refinancing risk: short term debt is zero.

Financial and operational results

Nestle India ($NESTLEIND) key annual financial indicators

mln. INR	2012	2013	2014	2015	2016	2016/2015
P&L
Revenue	83,023	90,619	98,063	81,233	91,593	12.8%
EBITDA	18,255	19,655	20,502	15,976	17,114	7.1%
Net Income	10,679	11,171	11,847	5,633	9,265	64.5%
Balance Sheet
Cash	2,370	7,494	4,458	4,996	8,800	76.2%
Short Term Debt	2	0	41	9	0	-100.0%
Long Term Debt	10,500	11,895	155	168	332	97.4%
Cash flow
Capex	9,768	3,449	1,894	1,508
Ratios
Revenue growth	10.8%	9.1%	8.2%	-17.2%	12.8%
EBITDA growth	18.8%	7.7%	4.3%	-22.1%	7.1%

EBITDA Margin	22.0%	21.7%	20.9%	19.7%	18.7%	-1.0%
Net Income Margin	12.9%	12.3%	12.1%	6.9%	10.1%	3.2%
CAPEX, % of revenue	11.8%	3.8%	1.9%	1.9%

ROIC	57.7%	47.9%	49.6%	40.2%	43.7%	3.5%
ROE	69.5%	53.6%	45.5%	19.9%	31.8%	11.9%
Net Debt/EBITDA	0.4x	0.2x	-0.2x	-0.3x	-0.5x	-0.2x

Peers in Packaged Foods

Below we provide Nestle India benchmarking against other companies in Packaged Foods 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
Simran Farms ($SIMRAN)	-	23.8%	27.5%	23.4%	0.7%
Heritage Foods ($HERITGFOOD)	-	15.0%	7.5%	20.4%	14.8%
Rcl Foods ($RCLFOODS)	-56.8%	-34.2%	18.2%	17.8%	-
Kwality ($KWALITY)	-	62.6%	27.5%	17.3%	9.1%
Umang Dairies ($UMANGDAIR)	-	15.7%	24.5%	16.1%	-24.8%
Median (18 companies)	-1.1%	15.4%	16.0%	9.1%	5.9%
Nestle India ($NESTLEIND)	-	9.1%	8.2%	-17.2%	12.8%

Top companies by EBITDA margin, %


Top 5	FY2012	FY2013	FY2014	FY2015	FY2016
Zydus Wellness ($ZYDUSWELL)	23.1%	25.4%	22.6%	23.8%	21.3%
Glaxosmithkline Consumer Healthcare ($GSKCONS)	18.6%	17.8%	22.5%	17.2%	19.4%
Sampre Nutritions ($SAMPRE)	-	-	-	16.8%	-
Krbl ($KRBL)	14.1%	14.2%	15.1%	15.4%	15.8%
Adf Foods ($ADFFOODS)	13.5%	11.2%	8.6%	14.5%	-
Median (20 companies)	7.2%	7.1%	8.6%	6.6%	6.5%
Nestle India ($NESTLEIND)	22.0%	21.7%	20.9%	19.7%	18.7%

Top companies by CAPEX/Revenue, %


Top 5	FY2012	FY2013	FY2014	FY2015	FY2016
Krbl ($KRBL)	4.1%	4.0%	6.1%	7.3%	5.1%
Kwality ($KWALITY)	1.3%	0.7%	1.2%	1.9%	3.5%
Britannia Industries ($BRITANNIA)	4.9%	3.7%	1.6%	1.5%	2.9%
Heritage Foods ($HERITGFOOD)	2.1%	1.9%	3.7%	2.5%	2.9%
Vadilal Industries ($VADILALIND)	12.2%	9.4%	5.9%	2.2%	2.9%
Median (9 companies)	3.3%	3.8%	4.0%	2.3%	2.9%

Top companies by ROIC, %


Top 5	FY2012	FY2013	FY2014	FY2015	FY2016
Britannia Industries ($BRITANNIA)	24.6%	33.7%	54.0%	59.4%	66.7%
Glaxosmithkline Consumer Healthcare ($GSKCONS)	44.6%	-	-	36.2%	35.7%
Heritage Foods ($HERITGFOOD)	11.7%	29.6%	22.4%	13.5%	26.3%
Zydus Wellness ($ZYDUSWELL)	-	41.0%	28.8%	24.5%	18.6%
Krbl ($KRBL)	11.7%	14.5%	18.3%	17.0%	17.6%
Median (19 companies)	12.1%	14.1%	19.8%	18.1%	17.6%
Nestle India ($NESTLEIND)	57.7%	47.9%	49.6%	40.2%	43.7%

Top companies by Net Debt / EBITDA


Top 5	FY2012	FY2013	FY2014	FY2015	FY2016
Kwality ($KWALITY)	3.9x	3.9x	3.6x	8.1x	3.6x
Vadilal Industries ($VADILALIND)	2.6x	4.5x	3.9x	4.0x	2.1x
Venky'S (India) ($VENKYS)	2.6x	2.8x	6.7x	3.9x	3.6x
Bambino Agro Industries ($BAMBINO)	3.2x	-	3.2x	2.9x	-
Krbl ($KRBL)	4.1x	2.9x	3.0x	2.7x	2.1x
Median (18 companies)	1.9x	1.3x	1.2x	0.0x	0.0x
Nestle India ($NESTLEIND)	0.4x	0.2x	-0.2x	-0.3x	-0.5x

Nestle India stock price chart

Nestle India financials

mln.	FY2010	FY2011	FY2012

Revenue	95,100	74,908	83,023
EBITDA	12,514	15,369	18,255
Net income	8,187	9,616	10,679
CAPEX	4,475	15,571	9,768
Debt	0.000	9,709	10,502
Cash	2,553	2,272	2,370

About Nestle India

Nestl? India Limited manufactures and exports food products in India and internationally. It provides prepared dishes and cooking aids, including noodles, bhuna masala, coconut milk powder, pasta, sauces, and soups; chocolate and confectionery products; milk and nutrition products, such as infant formula with probiotics, dairy products, and dairy whiteners; and coffee and beverage products, such as coffee and tea. The company also offers beverage systems, instant coffee chicory mixture, and culinary products. The company sells its products primarily under the NESCAF?, MAGGI, MILKYBAR, NESTL? MUNCH, KIT KAT, NESTL? Milk Chocolate, BAR-ONE, ALPINO, MILKMAID, and NESTEA brand names; and provides products of daily consumption and use under the NESTL? Milk, NESTL? Slim Milk, NESTL? Dahi, NESTL? Jeera Raita, and MILKMAID Sweetened Condensed Milk brand names. Nestl? India Limited is headquartered in Gurgaon, India.