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Suzlon Energy reports 127% EBITDA growth in 2017 and 8.0 pp EBITDA Margin growth from 11.7% to 19.7%

06-04-2017 • About Suzlon Energy ($SUZLON) • By InTwits

Suzlon Energy reported FY2017 financial results today. Here are the key drivers of the company's long term financial model:
  • EBITDA Margin is expanding: 19.7% in FY2017 vs. 11.7% in FY2016 vs. -5.3% in FY2013
  • EBITDA Margin is quite volatile: 19.7% in FY2017, 11.7% in FY2016, 4.0% in FY2015, 0.8% in FY2014, -5.3% in FY2013
  • Suzlon Energy has low CAPEX intensity: 5 year average CAPEX/Revenue was 3.7%. At the same time it's in pair with industry average of 1.6%
  • CAPEX is quite volatile: ₹7,737m in FY2017, ₹14,944m in FY2016, ₹5,386m in FY2015, ₹6,078m in FY2014, ₹4,838m in FY2013
  • The company has highly profitable business model: ROIC is 106.7%
  • It operates with high leverage: Net Debt/EBITDA is 2.6x while industry average is 0.7x
Below you can find a comprehensive analysis of the key data driving the company's performance and the stock price.

Revenue and profitability


Suzlon Energy's Revenue surged on 34.6%. Having declining revenue the company managed to increase EBITDA margin. EBITDA Margin increased on 4.9 pp from 8.5% to 13.4% in FY2017. EBITDA Margin grew at 6.1 pp per annum in FY2013-FY2017.

Gross Margin showed almost no change in FY2017. Gross Margin stuck to a growing trend at 3.9 pp per annum in the last 5 years.

Net Income margin increased slightly on 0.57 pp from 6.2% to 6.8% in FY2017.

Investments (CAPEX, working capital and M&A)


Suzlon Energy's CAPEX/Revenue was 3.3% in FY2017. Suzlon Energy's CAPEX/Revenue showed almost no change from FY2014 to FY2017. It's average CAPEX/Revenue for the last three years was 3.8%.

Leverage (Debt)


Debt level is 2.6x Net Debt / EBITDA and 2.8x Debt / EBITDA. Net Debt / EBITDA dropped on 6.9x from 9.5x to 2.6x in FY2017. Debt dropped on 37.8% while cash dropped on 46.4%.

Suzlon Energy has short term refinancing risk: cash is only 16.2% of short term debt.

Financial and operational results


FY ended 31-03-2017

Suzlon Energy ($SUZLON) key annual financial indicators

mln. INR201320142015201620172017/2016
P&L
Revenue187,431202,116198,36794,296126,92534.6%
Gross Profit51,03557,76262,18038,25851,49634.6%
EBITDA-9,8971,6688,01111,01824,994126.8%
Net Income-45,600-33,768-91,5775,8318,57747.1%
Balance Sheet
Cash19,59024,47925,4286,2663,361-46.4%
Short Term Debt43,33154,12470,24418,94920,7649.6%
Long Term Debt108,577116,409107,86692,24648,410-47.5%
Cash flow
Capex6,9006,9057,3634,0734,1401.6%
Ratios
Revenue growth-11.1%7.8%-1.9%-52.5%34.6%
EBITDA growth-152.6%-116.9%380.3%37.5%126.8%
Gross Margin27.2%28.6%31.3%40.6%40.6%-0.0%
EBITDA Margin-5.3%0.8%4.0%11.7%19.7%8.0%
Net Income Margin-24.3%-16.7%-46.2%6.2%6.8%0.6%
CAPEX, % of revenue3.7%3.4%3.7%4.3%3.3%-1.1%
ROIC-9.4%-3.5%-0.1%9.4%106.7%97.2%
ROE-149.9%
Net Debt/EBITDA87.6x19.1x9.5x2.6x-6.9x

Peers in Heavy Electrical Equipment


Below we provide Suzlon Energy benchmarking against other companies in Heavy Electrical Equipment 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 FY2013 FY2014 FY2015 FY2016 FY2017
Ujaas Energy ($UJAAS)614.7%116.7%-78.9%149.4%-
Techno Electric & Engineering Company ($TECHELE)-15.7%1.7%12.6%38.9%-
Techno Electric And Engineering Co. ($TECHNO)-15.7%1.7%12.6%38.9%-
Voltamp Transformers ($VOLTAMP)-7.7%-13.7%16.2%9.0%-
Transformers And Rectifiers (India) ($TRIL)-1.3%42.8%-24.3%7.4%-
 
Median (16 companies)-5.3%0.8%4.5%-5.3%-
Suzlon Energy ($SUZLON)-7.8%-1.9%-52.5%34.6%


Top companies by EBITDA margin, %

Top 5 FY2013 FY2014 FY2015 FY2016 FY2017
Ujaas Energy ($UJAAS)18.7%17.4%38.1%22.6%-
Sterlite Technologies ($STRTECH)7.5%10.8%15.0%20.9%-
Techno Electric & Engineering Company ($TECHELE)34.5%28.5%26.5%20.2%-
Techno Electric And Engineering Co. ($TECHNO)34.5%28.5%26.5%20.2%-
Bgr Energy Systems ($BGRENERGY)14.6%12.2%4.0%9.7%-
 
Median (15 companies)8.8%6.7%7.1%7.7%-
Suzlon Energy ($SUZLON)-5.3%0.8%4.0%11.7%19.7%


Top companies by CAPEX/Revenue, %

Top 5 FY2013 FY2014 FY2015 FY2016 FY2017
Swelect Energy Systems ($SWELECTES)42.5%50.8%21.8%44.0%-
Sterlite Technologies ($STRTECH)47.2%64.9%37.4%10.3%-
Bharat Heavy Electricals ($BHEL)3.6%4.1%1.1%5.3%-
T D Power Systems ($TDPOWERSYS)14.5%15.1%3.8%3.4%-
Bgr Energy Systems ($BGRENERGY)5.9%0.4%0.3%3.1%-
 
Median (13 companies)3.0%2.4%2.2%2.6%-
Suzlon Energy ($SUZLON)3.7%3.4%3.7%4.3%3.3%


Top companies by ROIC, %

Top 5 FY2013 FY2014 FY2015 FY2016 FY2017
Ujaas Energy ($UJAAS)28.5%33.7%10.2%16.2%-
Techno Electric & Engineering Company ($TECHELE)12.6%9.3%10.2%11.3%-
Techno Electric And Engineering Co. ($TECHNO)12.6%9.3%10.2%11.3%-
Voltamp Transformers ($VOLTAMP)6.5%1.9%5.4%9.8%-
Bgr Energy Systems ($BGRENERGY)11.9%9.7%2.8%7.4%-
 
Median (19 companies)7.1%9.3%4.1%4.0%-
Suzlon Energy ($SUZLON)-9.4%-3.5%-0.1%9.4%106.7%


Top companies by Net Debt / EBITDA

Top 5 FY2013 FY2014 FY2015 FY2016 FY2017
Emco ($EMCO)7.3x5.7x7.3x11.2x-
Bgr Energy Systems ($BGRENERGY)3.5x4.1x13.0x6.9x-
Schneider Electric Infrastructure ($SCHNEIDER)5.5x--4.2x-
Transformers And Rectifiers (India) ($TRIL)4.2x4.1x4.8x3.6x-
Swelect Energy Systems ($SWELECTES)1.3x5.0x-8.1x3.0x-
 
Median (14 companies)2.6x2.5x2.6x1.9x-
Suzlon Energy ($SUZLON)-87.6x19.1x9.5x2.6x