Gail (India) CAPEX surged on 66.6% and Revenue jumped on 12.2%

24-05-2018 • About Gail (India) ($GAIL) • By InTwits

Gail (India) reported FY2018 financial results today. Overall the company's long term financial model is characterised by the following facts:

Gail (India) has medium CAPEX intensity: 5 year average CAPEX/Revenue was 5.3%. At the same time it's a lot of higher than industry average of 3.4%.
CAPEX is quite volatile: ₹34,020m in FY2018, ₹20,417m in FY2017, ₹14,605m in FY2016, ₹28,898m in FY2015, ₹52,697m in FY2014
The company has highly profitable business model: ROIC is 12.7%

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 12.2%. During the last 5 years Revenue growth bottomed in FY2016 at -14.3% and was accelerating since that time. Revenue growth happened at the same time with EBITDA margin expansion. EBITDA Margin increased slightly on 0.75 pp from 13.4% to 14.2% in FY2018. During FY2014-FY2018 EBITDA Margin bottomed in FY2016 at 8.5% and was growing since that time.

Net Income margin increased slightly on 1.9 pp from 7.0% to 8.8% in FY2018. During the last 5 years Net Income margin bottomed in FY2016 at 3.6% and was growing since that time.

Investments (CAPEX, working capital and M&A)

In FY2018 Gail (India) had CAPEX/Revenue of 6.3%. Gail (India)'s CAPEX/Revenue increased slightly on 1.5 pp from 4.8% in FY2015 to 6.3% in FY2018. It's average CAPEX/Revenue for the last three years was 4.4%. During FY2014-FY2018 CAPEX as a % of Revenue bottomed in FY2016 at 2.8% and was growing since that time.

Return on investment

The company operates at good ROIC (12.7%) while ROE is low (11.9%). ROIC increased on 2.4 pp from 10.3% to 12.7% in FY2018. ROE increased on 3.0 pp from 8.9% to 11.9% in FY2018. During FY2014-FY2018 ROIC bottomed in FY2016 at 5.5% and was growing since that time. During the last 5 years ROE bottomed in FY2016 at 5.3% and was growing since that time.

Leverage (Debt)

Debt level is -0.1x Net Debt / EBITDA and 0.3x Debt / EBITDA. Debt dropped on 46.4% while cash surged on 101%.

Gail (India) has no short term refinancing risk: cash is higher than short term debt (292.4%).

Financial and operational results

FY ended 31-03-2018

Gail (India) ($GAIL) key annual financial indicators

mln. INR	2014	2015	2016	2017	2018	2018/2017
P&L
Revenue	616,435	605,147	518,553	484,546	543,581	12.2%
EBITDA	79,912	56,239	44,223	65,008	76,980	18.4%
Net Income	47,862	31,601	18,692	33,682	47,991	42.5%
Balance Sheet
Cash	32,111	15,583	18,457	14,210	28,585	101.2%
Short Term Debt	24,761	35,390	8,117	7,292	9,777	34.1%
Long Term Debt	160,609	147,524	58,649	31,798	11,186	-64.8%
Cash flow
Capex	52,697	28,898	14,605	20,417	34,020	66.6%
Ratios
Revenue growth	21.1%	-1.8%	-14.3%	-6.6%	12.2%
EBITDA growth	7.1%	-29.6%	-21.4%	47.0%	18.4%

EBITDA Margin	13.0%	9.3%	8.5%	13.4%	14.2%	0.7%
Net Income Margin	7.8%	5.2%	3.6%	7.0%	8.8%	1.9%
CAPEX, % of revenue	8.5%	4.8%	2.8%	4.2%	6.3%	2.0%

ROIC	12.1%	7.3%	5.5%	10.3%	12.7%	2.4%
ROE	15.6%	9.5%	5.3%	8.9%	11.9%	3.0%
Net Debt/EBITDA	1.9x	3.0x	1.1x	0.4x	-0.1x	-0.5x

Peers in Utilities:Non-Elec.

Below you can find Gail (India) benchmarking vs. other companies in Utilities:Non-Elec. 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.

Gail (India) stock price chart

Gail (India) financials

mln.	FY2010	FY2011	FY2012

Revenue	256,772	351,067	440,578
EBITDA	54,658	65,070	70,665
Net income	33,278	40,210	44,436
CAPEX	59,581	72,458	98,482
Debt	54,132	69,041	115,056
Cash	45,486	25,844	14,462

About Gail (India)

GAIL (India) Limited operates as a natural gas company in India and internationally. The company operates through Transmission Services, Natural Gas Trading, Petrochemicals, Liquefied Petroleum Gas (LPG) and Other Liquid Hydrocarbons, and Other segments. It is involved in the transmission, distribution, and marketing of natural gas to power and fertilizer sectors, as well as supplies liquefied natural gas to downstream consumers. The company also markets LPG, propane, pentane, naphtha, MFO, propylene, and hydrogenated C4 mix; and manufactures and markets petrochemicals, such as high-density polyethylene and linear low-density polyethylene under the G-Lex and G-Lene brand names. In addition, it operates approximately 400 compressed natural gas retail outlets; and provides piped natural gas to domestic, commercial, and industrial applications, as well as has participating interests in 20 exploration blocks in Mahanadi, Mumbai, Cambay, Assam-Arakan, Tripura Fold Belt, Gujarat Kutch, Krishna Godavari, Cauvery, and Cauvery Palar basins. Further, the company offers long term lease of dark fiber and duct, tower space and collocation facilities, and point-to-point leased line bandwidth services through its 13,000 km OFC network; and generates electric power through a joint venture. It owns approximately 10,900 km of natural gas pipelines; 2 LPG pipelines covering 2,040 km; 7 gas processing plants for production of LPG and other liquid hydrocarbons; and a gas based integrated petrochemical plant for producing polymer. The company was founded in 1984 and is based in New Delhi, India.