Srei Infrastructure Finance reports 112% CAPEX growth in 2018 and 12.8% Revenue growth

28-04-2018 • About Srei Infrastructure Finance ($SREINFRA) • By InTwits

Srei Infrastructure Finance reported FY2018 financial results today. Here are the key drivers of the company's long term financial model:

Srei Infrastructure Finance is a growth stock: FY2018 revenue growth was 12.8%, 5 year revenue CAGR was 11.5% at FY2018 ROIC 1.6%
Srei Infrastructure Finance has high CAPEX intensity: 5 year average CAPEX/Revenue was 20.8%. At the same time it's a lot of higher than industry average of 3.9%.
CAPEX is quite volatile: ₹27,610m in FY2018, ₹13,006m in FY2017, ₹1,929m in FY2016, ₹1,737m in FY2015, ₹3,947m in FY2014
The company has potentially unprofitable business model: ROIC is 1.6%
It operates with high leverage: Net Debt/EBITDA is 8.7x while industry average is 2.8x

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 surged on 12.8%. Revenue decline was accompanies by EBITDA margin decline. EBITDA Margin decreased on 7.6 pp from 19.7% to 12.1% in FY2018. During FY2014-FY2018 EBITDA Margin bottomed in FY2017 at 66.2%.

Net Income margin increased on 2.1 pp from 5.2% to 7.3% in FY2018. During the last 5 years Net Income margin bottomed in FY2016 at 2.2% and was growing since that time.

Investments (CAPEX, working capital and M&A)

In FY2018 Srei Infrastructure Finance had CAPEX/Revenue of 52.5%. The company showed fast CAPEX/Revenue growth of 47.1 pp from 5.4% in FY2015 to 52.5% in FY2018. For the last three years the average CAPEX/Revenue was 28.8%. To fuel its fast growth Srei Infrastructure Finance invested a large share of EBITDA (73.6%) to CAPEX. During FY2014-FY2018 CAPEX as a % of Revenue bottomed in FY2015 at 5.4% and was growing since that time.

Return on investment

The company operates at low ROIC (1.6%) and ROE (7.5%). ROIC showed almost no change in FY2018. ROE increased slightly on 1.9 pp from 5.7% to 7.5% in FY2018. During FY2014-FY2018 ROE bottomed in FY2016 at 2.0% and was growing since that time.

Leverage (Debt)

Debt level is 8.7x Net Debt / EBITDA and 8.8x Debt / EBITDA. Net Debt / EBITDA jumped on 0.3x from 8.4x to 8.7x in FY2018. Debt surged on 25.5% while cash surged on 11.6%.

Srei Infrastructure Finance has short term refinancing risk: cash is only 1.4% of short term debt.

Financial and operational results

FY ended 31-03-2018

Srei Infrastructure Finance ($SREINFRA) key annual financial indicators

mln. INR	2014	2015	2016	2017	2018	2018/2017
P&L
Revenue	32,014	31,954	32,378	46,600	52,581	12.8%
EBITDA	26,143	25,070	23,587	30,864	37,504	21.5%
Net Income	1,385	1,302	725	2,434	3,846	58.0%
Balance Sheet
Cash	2,635	2,840	1,673	3,034	3,386	11.6%
Short Term Debt	126,636	135,216	144,352	172,816	244,540	41.5%
Long Term Debt	71,037	68,042	62,375	89,226	84,193	-5.6%
Cash flow
Capex	3,947	1,737	1,929	13,006	27,610	112.3%
Ratios
Revenue growth	5.1%	-0.2%	1.3%	43.9%	12.8%
EBITDA growth	0.2%	-4.1%	-5.9%	30.9%	21.5%

EBITDA Margin	81.7%	78.5%	72.8%	66.2%	71.3%	5.1%
Net Income Margin	4.3%	4.1%	2.2%	5.2%	7.3%	2.1%
CAPEX, % of revenue	12.3%	5.4%	6.0%	27.9%	52.5%	24.6%

ROIC			0.4%	1.2%	1.6%	0.5%
ROE	4.0%	3.7%	2.0%	5.7%	7.5%	1.9%
Net Debt/EBITDA	7.5x	8.0x	8.7x	8.4x	8.7x	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	FY2014	FY2015	FY2016	FY2017	FY2018
Bajaj Holdings & Investment ($BAJAJHLDNG)	25.9%	27.0%	-12.2%	78.4%	-
Median (1 company)	20.8%	14.3%	8.2%	78.4%	-
Srei Infrastructure Finance ($SREINFRA)	-	-0.2%	1.3%	43.9%	12.8%

Top companies by EBITDA margin, %


Top	FY2014	FY2015	FY2016	FY2017	FY2018
Bajaj Holdings & Investment ($BAJAJHLDNG)	92.3%	92.7%	91.4%	74.8%	-
Median (1 company)	65.5%	59.4%	60.5%	74.8%	-
Srei Infrastructure Finance ($SREINFRA)	81.7%	78.5%	72.8%	66.2%	71.3%

Top companies by CAPEX/Revenue, %


Top	FY2014	FY2015	FY2016	FY2017	FY2018
Bajaj Holdings & Investment ($BAJAJHLDNG)	0.0%	0.0%	0.2%	0.0%	-
Median (1 company)	0.9%	0.7%	1.0%	0.0%	-
Srei Infrastructure Finance ($SREINFRA)	12.3%	5.4%	6.0%	27.9%	52.5%

Top companies by ROIC, %


Top	FY2014	FY2015	FY2016	FY2017	FY2018
Bajaj Holdings & Investment ($BAJAJHLDNG)	3.5%	3.9%	3.0%	3.8%	-
Median (1 company)	4.1%	4.1%	4.2%	3.8%	-
Srei Infrastructure Finance ($SREINFRA)	-	-	0.4%	1.2%	1.6%

Top companies by Net Debt / EBITDA


Top	FY2014	FY2015	FY2016	FY2017	FY2018
Bajaj Holdings & Investment ($BAJAJHLDNG)	-0.2x	-0.0x	-3.3x	-0.0x	-
Median (1 company)	3.4x	0.0x	0.0x	-0.0x	-
Srei Infrastructure Finance ($SREINFRA)	7.5x	8.0x	8.7x	8.4x	8.7x

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.