Crompton Greaves reports 2.8% EBITDA growth in 2017 and almost no change in EBITDA Margin of 8.0%

27-05-2017 • About Crompton Greaves ($CROMPGREAV) • By InTwits

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

Crompton Greaves has low CAPEX intensity: 5 year average CAPEX/Revenue was 2.3%. At the same time it's in pair with industry average of 1.6%
CAPEX is quite volatile: ₹638m in FY2017, ₹1,437m in FY2016, ₹2,086m in FY2015, ₹2,963m in FY2014, ₹2,204m in FY2013
The company has potentially unprofitable business model: ROIC is 4.9%
It operates with high leverage: Net Debt/EBITDA is 1.9x while industry average is 0.8x

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 decreased slightly on 1.4%. EBITDA Margin showed almost no change in FY2017.

Net Income margin decreased slightly on 0.69 pp from -8.2% to -8.9% in FY2017. During FY2013-FY2017 Net Income margin topped in FY2014 at 1.8% and was declining since that time.

Investments (CAPEX, working capital and M&A)

In FY2017 the company had CAPEX/Revenue of 1.2%. The company showed small CAPEX/Revenue decline of 1.0 pp from 2.2% in FY2014 to 1.2% in FY2017. It's average CAPEX/Revenue for the last three years was 2.4%. During FY2013-FY2017 CAPEX as a % of Revenue topped in FY2015 at 3.6% and was declining since that time.

Return on investment

The company operates at low but positive ROIC (4.9%) and negative ROE (-11.3%). ROIC increased slightly on 0.97 pp from 3.9% to 4.9% in FY2017. ROE decreased slightly on 0.96 pp from -10.3% to -11.3% in FY2017. During FY2013-FY2017 ROE topped in FY2014 at 6.8% and was declining since that time.

Leverage (Debt)

Company's Net Debt / EBITDA is 1.9x and Debt / EBITDA is 3.6x. Net Debt / EBITDA surged on 0.8x from 1.2x to 1.9x in FY2017. Debt surged on 24.8% while cash decreased on 4.5%.

Crompton Greaves has short term refinancing risk: cash is only 68.6% of short term debt.

Financial and operational results

FY ended 31-03-2017

Crompton Greaves ($CROMPGREAV) key annual financial indicators

mln. INR	2013	2014	2015	2016	2017	2017/2016
P&L
Revenue	120,944	136,315	58,002	55,950	55,165	-1.4%
SG&A			385	400
EBITDA	3,832	8,487	5,092	4,302	4,424	2.8%
Net Income	-361	2,443	235	-4,593	-4,909
Balance Sheet
Cash	5,233	7,677	6,777	7,952	7,594	-4.5%
Short Term Debt	4,720	7,614	8,150	6,922	11,077	60.0%
Long Term Debt	15,550	16,323	12,772	5,990	5,038	-15.9%
Cash flow
Capex	2,204	2,963	2,086	1,437	638	-55.6%
Ratios
Revenue growth	7.5%	12.7%	-57.5%	-3.5%	-1.4%
EBITDA growth	-52.3%	121.5%	-40.0%	-15.5%	2.8%

EBITDA Margin	3.2%	6.2%	8.8%	7.7%	8.0%	0.3%
SG&A, % of revenue			0.7%	0.7%
Net Income Margin	-0.3%	1.8%	0.4%	-8.2%	-8.9%	-0.7%
CAPEX, % of revenue	1.8%	2.2%	3.6%	2.6%	1.2%	-1.4%

ROIC	3.5%	10.1%	4.1%	3.9%	4.9%	1.0%
ROE	-1.0%	6.8%	0.6%	-10.3%	-11.3%	-1.0%
Net Debt/EBITDA	3.9x	1.9x	2.8x	1.2x	1.9x	0.8x

Peers in Heavy Electrical Equipment

Below we provide Crompton Greaves 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) ($TRIL)	-1.3%	42.8%	-24.3%	7.4%	-
Median (16 companies)	-7.7%	0.8%	4.5%	-6.1%	34.6%
Crompton Greaves ($CROMPGREAV)	-	12.7%	-57.5%	-3.5%	-1.4%

Top companies by Gross margin, %


Top	FY2013	FY2014	FY2015	FY2016	FY2017
Suzlon Energy ($SUZLON)	27.2%	28.6%	31.3%	40.6%	40.6%
Median (1 company)	27.2%	28.6%	31.3%	40.6%	40.6%

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%	-
Suzlon Energy ($SUZLON)	-5.3%	0.8%	4.0%	11.7%	19.7%
Median (15 companies)	8.8%	6.7%	5.5%	8.0%	19.7%
Crompton Greaves ($CROMPGREAV)	3.2%	6.2%	8.8%	7.7%	8.0%

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 ($BHEL)	3.6%	4.1%	1.1%	5.3%	-
Suzlon Energy ($SUZLON)	3.7%	3.4%	3.7%	4.3%	3.3%
T D Power Systems ($TDPOWERSYS)	14.5%	15.1%	3.8%	3.4%	-
Median (13 companies)	3.3%	2.4%	2.2%	3.0%	3.3%
Crompton Greaves ($CROMPGREAV)	1.8%	2.2%	3.6%	2.6%	1.2%

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%	-
Suzlon Energy ($SUZLON)	-9.4%	-3.5%	-0.1%	9.4%	106.7%
Median (19 companies)	7.1%	7.4%	4.0%	5.7%	106.7%
Crompton Greaves ($CROMPGREAV)	3.5%	10.1%	4.1%	3.9%	4.9%

Top companies by Net Debt / EBITDA


Top 5	FY2013	FY2014	FY2015	FY2016	FY2017
Emco ($EMCO)	7.3x	5.7x	7.3x	11.2x	-
Suzlon Energy ($SUZLON)	-	87.6x	19.1x	9.5x	2.6x
Bgr Energy Systems ($BGRENERGY)	3.5x	4.1x	13.0x	6.9x	-
Schneider Electric Infrastructure ($SCHNEIDER)	5.5x	-	-	4.2x	-
Transformers And Rectifiers (India) ($TRIL)	4.2x	4.1x	4.8x	3.6x	-
Median (14 companies)	2.6x	2.5x	2.6x	2.1x	2.6x
Crompton Greaves ($CROMPGREAV)	3.9x	1.9x	2.8x	1.2x	1.9x

Crompton Greaves stock price chart

Crompton Greaves financials

mln.	FY2010	FY2011	FY2012

Revenue	91,409	100,051	112,486
EBITDA	12,455	13,067	8,036
Net income	8,599	8,887	3,736
CAPEX	2,904	7,461	3,724
Debt	4,879	3,932	9,828
Cash	6,688	2,582	4,701

About Crompton Greaves

Crompton Greaves Limited provides various electrical products and services for utilities, industries, and consumers primarily in India. It operates in four segments: Power Systems, Consumer Products, Industrial Systems, and Other. The Power Systems segment offers power and distribution transformers, switchgears, circuit breakers, vacuum interrupters, network protection and control gears, and reactors, as well as power supervisory control and data acquisition systems (SCADA). This segment also undertakes design, execution, and servicing of turnkey transmission and distribution, as well as sub-station projects and solutions, including end to end renewable projects. The Consumer Products segment manufactures and markets a range of products, including fans, light sources and luminaires, pumps, as well as household appliances, such as geysers, mixer grinders, toasters, irons, and electric lanterns. The Industrial Systems segment provides power conversion equipment of a spectrum of high and low tension rotating machines, such as motors and alternators; inverters and converters; and stampings, as well as railway transportation and signaling equipment. It also offers generators, drives, drives solutions, traction electronics, and SCADA. The Other segment distributes electricity; and provides self adhesive tapes and specialty lables. Crompton Greaves Limited serves utilities and industries in generation, transmission, distribution, renewables, oil and gas, cement, metals and mining, and transportation sectors. The company also sells its products in Asia, Africa, North America, South America, Europe, and Australia. Crompton Greaves Limited was founded in 1937 and is based in Mumbai, India.