Tata Steel reports 112% EBITDA growth in 2017 and 10.4% Revenue growth

16-05-2017 • About Tata Steel ($TATASTEEL) • By InTwits

Tata Steel reported FY2017 financial results today. Here are the key drivers of the company's long term financial model:

Tata Steel has medium CAPEX intensity: 5 year average CAPEX/Revenue was 9.7%. At the same time it's a lot of higher than industry average of 7.2%.
The company has business model with low profitability: ROIC is 8.4%
It operates with high leverage: Net Debt/EBITDA is 4.6x while industry average is 3.5x

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 jumped on 10.4%. Revenue growth happened at the same time with EBITDA margin expansion. EBITDA Margin increased on 7.0 pp from 7.6% to 14.6% in FY2017.

Net Income margin decreased on 3.3 pp from -0.36% to -3.6% in FY2017.

Investments (CAPEX, working capital and M&A)

Tata Steel's CAPEX/Revenue was 6.6% in FY2017. The company showed decline in CAPEX/Revenue of 4.5 pp from 11.1% in FY2014 to 6.6% in FY2017. For the last three years the average CAPEX/Revenue was 8.7%. CAPEX as a % of Revenue declined at -1.1 pp per annum in the last 5 years.

Return on investment

The company operates at low but positive ROIC (8.4%) and negative ROE (-10.8%). ROIC increased on 6.3 pp from 2.1% to 8.4% in FY2017. ROE decreased on 9.3 pp from -1.5% to -10.8% in FY2017.

Leverage (Debt)

Debt level is 4.6x Net Debt / EBITDA and 4.9x Debt / EBITDA. Net Debt / EBITDA dropped on 4.8x from 9.4x to 4.6x in FY2017. Debt increased slightly on 1.3% while cash dropped on 20.5%.

Tata Steel has short term refinancing risk: cash is only 25.9% of short term debt.

Financial and operational results

FY ended 31-03-2017

Tata Steel ($TATASTEEL) key annual financial indicators

mln. INR	2013	2014	2015	2016	2017	2017/2016
P&L
Revenue	1,334,166	1,473,473	1,383,189	1,056,832	1,166,826	10.4%
EBITDA	123,212	164,110	125,358	80,461	170,247	111.6%
Net Income	-70,576	35,949	-39,255	-3,828	-42,408
Balance Sheet
Cash	98,339	86,045	87,499	61,863	49,211	-20.5%
Short Term Debt	216,497	292,422	150,261	171,142	189,922	11.0%
Long Term Debt	468,576	523,664	656,752	648,728	640,223	-1.3%
Cash flow
Capex	154,715	164,201	134,924	101,634	77,156	-24.1%
Ratios
Revenue growth	0.9%	10.4%	-6.1%	-23.6%	10.4%
EBITDA growth	-0.8%	33.2%	-23.6%	-35.8%	111.6%

EBITDA Margin	9.2%	11.1%	9.1%	7.6%	14.6%	7.0%
Net Income Margin	-5.3%	2.4%	-2.8%	-0.4%	-3.6%	-3.3%
CAPEX, % of revenue	11.6%	11.1%	9.8%	9.6%	6.6%	-3.0%

ROIC	6.2%	8.9%	5.4%	2.1%	8.4%	6.3%
ROE	-18.4%	9.6%	-11.4%	-1.5%	-10.8%	-9.3%
Net Debt/EBITDA	4.8x	4.4x	5.7x	9.4x	4.6x	-4.8x

Peers in Iron & Steel/Interm.Products

Below you can find Tata Steel benchmarking vs. other companies in Iron & Steel/Interm.Products 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
India Steel Works ($ISWL)	20.5%	-15.4%	-16.3%	13.8%	-
Bhushan Steel ($BHUSANSTL)	3.2%	-5.9%	10.0%	10.9%	-
Maithan Alloys ($MAITHANALL)	59.1%	1.1%	15.0%	4.0%	-
Pennar Industries ($PENIND)	-8.5%	0.5%	12.7%	3.4%	-
Visa Steel ($VISASTEEL)	-24.1%	42.0%	-12.0%	1.8%	-
Median (33 companies)	8.8%	3.4%	-0.4%	-13.0%	-
Tata Steel ($TATASTEEL)	-	10.4%	-6.1%	-23.6%	10.4%

Top companies by EBITDA margin, %


Top 5	FY2013	FY2014	FY2015	FY2016	FY2017
Ramsarup Industries ($RAMSARUP)	-51.9%	-17.8%	-	82.3%	-
Bhushan Steel ($BHUSANSTL)	32.3%	28.1%	20.4%	17.7%	-
Jindal Steel & Power ($JINDALSTEL)	30.5%	28.1%	29.8%	17.2%	-
Tata Metaliks ($TATAMETALI)	0.9%	6.8%	14.6%	16.8%	-
Jai Corp ($JAICORPLTD)	16.3%	16.0%	12.7%	15.8%	-
Median (28 companies)	9.0%	7.0%	7.2%	8.1%	-
Tata Steel ($TATASTEEL)	9.2%	11.1%	9.1%	7.6%	14.6%

Top companies by CAPEX/Revenue, %


Top 5	FY2013	FY2014	FY2015	FY2016	FY2017
Jindal Steel & Power ($JINDALSTEL)	47.6%	69.6%	26.4%	21.8%	-
Steel Authority Of India ($SAIL)	20.7%	19.3%	16.9%	17.3%	-
Jsw Steel ($JSWSTEEL)	14.7%	11.3%	12.7%	12.4%	-
Pennar Industries ($PENIND)	1.8%	4.5%	2.4%	12.3%	-
Sarda Energy & Minerals ($SARDAEN)	24.1%	6.1%	5.5%	11.1%	-
Median (16 companies)	11.7%	7.7%	4.9%	5.9%	-
Tata Steel ($TATASTEEL)	11.6%	11.1%	9.8%	9.6%	6.6%

Top companies by ROIC, %


Top 5	FY2013	FY2014	FY2015	FY2016	FY2017
Tata Metaliks ($TATAMETALI)	-3.7%	19.9%	57.4%	42.6%	-
Maithan Alloys ($MAITHANALL)	15.1%	5.5%	15.3%	19.0%	-
Pennar Industries ($PENIND)	18.4%	12.3%	15.7%	16.6%	-
Kirloskar Ferrous Industries ($KIRLFER)	16.8%	12.4%	14.7%	15.9%	-
Sunflag Iron & Steel Co ($SUNFLAG)	5.6%	8.3%	11.2%	13.4%	-
Median (41 companies)	5.4%	5.5%	4.5%	3.5%	-
Tata Steel ($TATASTEEL)	6.2%	8.9%	5.4%	2.1%	8.4%

Top companies by Net Debt / EBITDA


Top 5	FY2013	FY2014	FY2015	FY2016	FY2017
Bhushan Steel ($BHUSANSTL)	8.6x	12.9x	17.7x	20.7x	-
Jindal Steel & Power ($JINDALSTEL)	4.0x	6.6x	7.7x	14.9x	-
Jayaswal Neco Industries ($JAYNECOIND)	7.2x	8.6x	11.2x	14.8x	-
Jsw Steel ($JSWSTEEL)	3.3x	3.4x	3.8x	6.5x	-
Sarda Energy & Minerals ($SARDAEN)	4.6x	4.8x	3.9x	5.8x	-
Median (22 companies)	4.4x	3.4x	1.7x	0.9x	-
Tata Steel ($TATASTEEL)	4.8x	4.4x	5.7x	9.4x	4.6x

Tata Steel stock price chart

Tata Steel financials

mln.	FY2010	FY2011	FY2012

Revenue	1,017,578	1,171,498	1,322,574
EBITDA	80,427	159,956	124,168
Net income	-20,092.200	89,827	53,898
CAPEX	71,495	95,884	120,777
Debt	531,004	606,788	598,968
Cash	68,151	108,591	107,988

About Tata Steel

Tata Steel Limited manufactures and sells steel and steel products in India and internationally. It operates through Steel, Ferro Alloys and Minerals, and Others segments. The company offers steel products to vehicle manufacturers and component suppliers, and aerospace sector; structural frames, infrastructure, building envelope, and internal fit out application products used for heating and ventilation, partition walls, etc.; and hot rolled coil products and high-gloss pre-finished steel perforated blanks primarily for use in domestic appliances, furniture and office equipment, racking and shelving, battery cases, bake-ware, and lighting applications. It also provides hot rolled and cold rolled sheets, wire rod and wire, sections, plates, bearings, and tubes for engineering companies; agricultural implements; wire products for farming and fencing applications; and engineering services. In addition, the company offers tinplate, ECCS, and Protact polymer-coated steel products for can making industry; formable steels for steel drums, and pails in the industrial packaging sector; strips and coils, quenched and tempered plates, and special profiles for track shoe and forklift masts, as well as engineered steel bars and tubes for lifting and excavating sector; welded pipeline packages and prefabricated structural products for wind, and oil and gas structures; light fabricated systems for solar farm foundations; and semi finished steel components for drilling and power generation. Further, it provides plates, bulb flats, angles, tubes, sections, and bars for shipbuilding; rail sections size, steel sleeper, noise reduction, other specialized track, and rail products for rail sector; and steel plate and sections, armored steel, blast protective structures, perimeter security, and anti-attack vehicle barriers, as well as engineering consultancy and solutions for defense and security sector. The company was founded in 1907 and is headquartered in Mumbai, India.