Srei Infrastructure Finance CAPEX surged on 574% and Revenue surged on 43.9%

09-05-2017 • About Srei Infrastructure Finance ($SREINFRA) • By InTwits

Srei Infrastructure Finance reported FY2017 financial results today. Here are the key drivers of the company's long term financial model:

Srei Infrastructure Finance is a growth stock: FY2017 revenue growth was 43.9%, 5 year revenue CAGR was 14.5% at FY2017 ROIC 1.2%
EBITDA Margin is declining: 66.2% in FY2017 vs. 72.8% in FY2016 vs. 85.7% in FY2013
Srei Infrastructure Finance has high CAPEX intensity: 5 year average CAPEX/Revenue was 12.0%. At the same time it's a lot of higher than industry average of 2.6%.
CAPEX is quite volatile: ₹13,006m in FY2017, ₹1,929m in FY2016, ₹1,737m in FY2015, ₹3,947m in FY2014, ₹2,592m in FY2013
The company has potentially unprofitable business model: ROIC is 1.2%
It operates with high leverage: Net Debt/EBITDA is 8.4x 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

Srei Infrastructure Finance's Revenue surged on 43.9%. During the last 5 years Revenue growth bottomed in FY2015 at -0.19% and was accelerating since that time. 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 declined at -4.8 pp per annum in the last 5 years.

Net Income margin increased on 3.0 pp from 2.2% to 5.2% in FY2017. During the last 5 years Net Income margin bottomed in FY2016 at 2.2%.

Investments (CAPEX, working capital and M&A)

In FY2017 Srei Infrastructure Finance had CAPEX/Revenue of 27.9%. The company's CAPEX/Revenue surged on 15.6 pp from 12.3% in FY2014 to 27.9% in FY2017. For the last three years the average CAPEX/Revenue was 13.1%.

Return on investment

The company operates at low ROIC (1.2%) and ROE (5.7%). ROIC increased slightly on 0.77 pp from 0.41% to 1.2% in FY2017. ROE increased on 3.7 pp from 2.0% to 5.7% in FY2017. During the last 5 years ROE bottomed in FY2016 at 2.0%.

Leverage (Debt)

Company's Net Debt / EBITDA is 8.4x and Debt / EBITDA is 8.5x. Net Debt / EBITDA dropped on 0.3x from 8.7x to 8.4x in FY2017. Debt jumped on 26.8% while cash surged on 81.4%. Net Debt/EBITDA stuck to a growing trend at 0.6x per annum in FY2013-FY2017.

Srei Infrastructure Finance has short term refinancing risk: cash is only 1.8% of short term debt.

Financial and operational results

FY ended 31-03-2017

Srei Infrastructure Finance ($SREINFRA) key annual financial indicators

mln. INR	2013	2014	2015	2016	2017	2017/2016
P&L
Revenue	30,448	32,014	31,954	32,378	46,600	43.9%
EBITDA	26,101	26,143	25,070	23,587	30,864	30.9%
Net Income	2,632	1,385	1,302	725	2,434	235.6%
Balance Sheet
Cash	1,532	2,635	2,840	1,673	3,034	81.4%
Short Term Debt	94,912	126,636	135,216	144,352	172,816	19.7%
Long Term Debt	67,540	71,037	68,042	62,375	89,226	43.0%
Cash flow
Capex	2,592	3,947	1,737	1,929	13,006	574.1%
Ratios
Revenue growth	28.4%	5.1%	-0.2%	1.3%	43.9%
EBITDA growth	32.3%	0.2%	-4.1%	-5.9%	30.9%

EBITDA Margin	85.7%	81.7%	78.5%	72.8%	66.2%	-6.6%
Net Income Margin	8.6%	4.3%	4.1%	2.2%	5.2%	3.0%
CAPEX, % of revenue	8.5%	12.3%	5.4%	6.0%	27.9%	22.0%

ROIC				0.4%	1.2%	0.8%
ROE	8.0%	4.0%	3.7%	2.0%	5.7%	3.7%
Net Debt/EBITDA	6.2x	7.5x	8.0x	8.7x	8.4x	-0.3x

Peers in Finance (including NBFCs)

Below you can find Srei Infrastructure Finance benchmarking vs. other companies in Finance (including NBFCs) 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	FY2013	FY2014	FY2015	FY2016	FY2017
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)	-	5.1%	-0.2%	1.3%	43.9%

Top companies by EBITDA margin, %


Top 5	FY2013	FY2014	FY2015	FY2016	FY2017
Pnb Gilts ($PNBGILTS)	96.4%	96.4%	96.1%	95.4%	-
Rural Electrification Corporation ($RECLTD)	97.3%	96.7%	93.3%	92.0%	-
Bajaj Holdings & Investment ($BAJAJHLDNG)	95.4%	92.3%	92.7%	91.4%	-
IDFC Limited ($IDFC)	89.6%	87.0%	81.7%	83.5%	-
Sakthi Finance ($SAKTHIFIN)	-	-	75.1%	75.1%	-
Median (22 companies)	65.4%	65.5%	59.4%	60.5%	-
Srei Infrastructure Finance ($SREINFRA)	85.7%	81.7%	78.5%	72.8%	66.2%

Top companies by CAPEX/Revenue, %


Top 5	FY2013	FY2014	FY2015	FY2016	FY2017
IDFC Limited ($IDFC)	0.1%	0.2%	0.5%	4.8%	-
Bengal & Assam Company ($BENGALASM)	4.5%	1.2%	2.1%	4.1%	-
Motilal Oswal Financial Services ($MOTILALOFS)	5.3%	1.7%	3.4%	2.5%	-
Cholamandalam Investment And Finance Company ($CHOLAFIN)	1.4%	0.8%	0.8%	1.8%	-
Reliance Capital ($RELCAPITAL)	0.7%	2.5%	1.0%	1.6%	-
Median (18 companies)	0.7%	0.9%	0.7%	1.0%	-
Srei Infrastructure Finance ($SREINFRA)	8.5%	12.3%	5.4%	6.0%	27.9%

Top companies by ROIC, %


Top 5	FY2013	FY2014	FY2015	FY2016	FY2017
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)	5.8%	5.8%	5.7%	4.6%	-
Rural Electrification Corporation ($RECLTD)	4.7%	5.2%	4.7%	4.3%	-
Median (54 companies)	4.4%	4.1%	4.1%	4.2%	-
Srei Infrastructure Finance ($SREINFRA)	-	-	-	0.4%	1.2%

Top companies by Net Debt / EBITDA


Top 5	FY2013	FY2014	FY2015	FY2016	FY2017
Pnb Gilts ($PNBGILTS)	11.2x	11.3x	8.8x	15.0x	-
Mahindra & Mahindra Financial Services ($M&MFIN)	6.6x	6.7x	7.0x	8.1x	-
Rural Electrification Corporation ($RECLTD)	8.0x	7.5x	8.0x	7.8x	-
Magma Fincorp ($MAGMA)	8.5x	7.0x	7.7x	7.5x	-
Shriram Transport Finance Co ($SRTRANSFIN)	5.0x	5.8x	7.0x	7.1x	-
Median (36 companies)	3.6x	3.4x	0.0x	0.0x	-
Srei Infrastructure Finance ($SREINFRA)	6.2x	7.5x	8.0x	8.7x	8.4x

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.