Steel Authority Of India reports 18.0% CAPEX decline in 2017 while 14.0% Revenue growth
30-05-2017 • About Steel Authority Of India (
$SAIL) • By InTwits
Steel Authority Of India reported FY2017 financial results today. Overall the company's long term financial model is characterised by the following facts:
- EBITDA Margin is quite volatile: 0.2% in FY2017, -7.5% in FY2016, 10.6% in FY2015, 9.0% in FY2014, 11.2% in FY2013
- Steel Authority Of India has high CAPEX intensity: 5 year average CAPEX/Revenue was 17.3%. At the same time it's a lot of higher than industry average of 6.9%.
- CAPEX is quite volatile: ₹20,417m in FY2017, ₹14,605m in FY2016, ₹28,898m in FY2015, ₹52,697m in FY2014, ₹89,904m in FY2013
- The company has unprofitable business model: ROIC is -3.6%
- It operates with high leverage: Net Debt/EBITDA is 576.7x while industry average is 27.3x
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 14.0%. Revenue growth happened at the same time with EBITDA margin expansion. EBITDA Margin increased on 7.7 pp from -7.5% to 0.15% in FY2017.
Net Income margin increased on 4.6 pp from -10.8% to -6.3% in FY2017.
Investments (CAPEX, working capital and M&A)
Steel Authority Of India's CAPEX/Revenue was 12.4% in FY2017. CAPEX/Revenue decreased on 6.9 pp from 19.3% in FY2014 to 12.4% in FY2017. It's average CAPEX/Revenue for the last three years was 15.5%. To fuel its fast growth the company made large investments to CAPEX (8,130% of EBITDA). CAPEX as a % of Revenue stuck to a declining trend at -1.9 pp per annum in the last 5 years.
Return on investment
The company operates at negative ROIC (-3.6%) and ROE (-7.1%). ROIC increased on 3.4 pp from -7.1% to -3.6% in FY2017. ROE increased on 2.8 pp from -10.0% to -7.1% in FY2017.
Leverage (Debt)
Company's Net Debt / EBITDA is 576.7x and Debt / EBITDA is 579.8x. Net Debt / EBITDA surged576.7x from to 576.7x in FY2017. Debt surged on 17.6% while cash jumped on 16.9%.
Steel Authority Of India has short term refinancing risk: cash is only 1.1% of short term debt.
Financial and operational results
FY ended 31-03-2017
Steel Authority Of India ($SAIL) key annual financial indicators| mln. INR | 2013 | 2014 | 2015 | 2016 | 2017 | 2017/2016 |
|---|
P&L
|
|---|
| Revenue | 444,773 | 464,677 | 455,908 | 385,506 | 439,467 | 14.0% |
| EBITDA | 49,740 | 41,787 | 48,343 | -29,025 | 671 | |
| Net Income | 23,291 | 26,521 | 20,353 | -41,765 | -27,562 | |
Balance Sheet
|
|---|
| Cash | 6,359 | 4,473 | 5,193 | 1,805 | 2,110 | 16.9% |
| Short Term Debt | 83,839 | 118,875 | 164,311 | 155,749 | 198,130 | 27.2% |
| Long Term Debt | 141,549 | 141,330 | 157,152 | 174,957 | 190,875 | 9.1% |
Cash flow
|
|---|
| Capex | 92,164 | 89,563 | 77,043 | 66,520 | 54,543 | -18.0% |
Ratios
|
|---|
| Revenue growth | -3.3% | 4.5% | -1.9% | -15.4% | 14.0% | |
| EBITDA growth | -22.5% | -16.0% | 15.7% | -160.0% | -102.3% | |
|
|---|
| EBITDA Margin | 11.2% | 9.0% | 10.6% | -7.5% | 0.2% | 7.7% |
| Net Income Margin | 5.2% | 5.7% | 4.5% | -10.8% | -6.3% | 4.6% |
| CAPEX, % of revenue | 20.7% | 19.3% | 16.9% | 17.3% | 12.4% | -4.8% |
|
|---|
| ROIC | 5.5% | 3.6% | 3.9% | -7.1% | -3.6% | 3.4% |
| ROE | 5.7% | 6.2% | 4.7% | -10.0% | -7.1% | 2.8% |
| Net Debt/EBITDA | 4.4x | 6.1x | 6.5x | | 576.7x |
Peers in Iron & Steel/Interm.Products
Below we provide Steel Authority Of India benchmarking against other companies in Iron & Steel/Interm.Products 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 |
|---|
| 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 ($VISASTEEL) | -24.1% | 42.0% | -12.0% | 1.8% | - |
| |
|---|
| Median (33 companies) | 9.3% | 3.4% | -0.4% | -13.0% | 10.4% |
|---|
| Steel Authority Of India ($SAIL) | - | 4.5% | -1.9% | -15.4% | 14.0% |
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 ($JAICORPLTD) | 16.3% | 16.0% | 12.7% | 15.8% | - |
| |
|---|
| Median (28 companies) | 9.0% | 7.0% | 7.2% | 8.4% | 14.6% |
|---|
| Steel Authority Of India ($SAIL) | 11.2% | 9.0% | 10.6% | -7.5% | 0.2% |
Top companies by CAPEX/Revenue, %
| Top 5 | FY2013 | FY2014 | FY2015 | FY2016 | FY2017 |
|---|
| Jindal Steel & Power ($JINDALSTEL) | 47.6% | 69.6% | 26.4% | 21.8% | - |
| Jsw Steel ($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% | - |
| Tata Steel ($TATASTEEL) | 11.6% | 11.1% | 9.8% | 9.6% | 6.6% |
| |
|---|
| Median (16 companies) | 11.6% | 7.7% | 4.9% | 5.9% | 6.6% |
|---|
| Steel Authority Of India ($SAIL) | 20.7% | 19.3% | 16.9% | 17.3% | 12.4% |
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 ($SUNFLAG) | 5.6% | 8.3% | 11.2% | 13.4% | - |
| |
|---|
| Median (41 companies) | 5.5% | 6.0% | 5.0% | 3.5% | 8.4% |
|---|
| Steel Authority Of India ($SAIL) | 5.5% | 3.6% | 3.9% | -7.1% | -3.6% |
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 ($JAYNECOIND) | 7.2x | 8.6x | 11.2x | 14.8x | - |
| Tata Steel ($TATASTEEL) | 4.8x | 4.4x | 5.7x | 9.4x | 4.6x |
| Jsw Steel ($JSWSTEEL) | 3.3x | 3.4x | 3.8x | 6.5x | - |
| |
|---|
| Median (23 companies) | 4.4x | 3.4x | 1.7x | 0.9x | 4.6x |
|---|
