Crompton Greaves Debt jumped on 23.9% and Net Debt / EBITDA jumped on 0.9x from 1.9x to 2.9x

30-05-2018 • About Crompton Greaves ($CROMPGREAV) • By InTwits

Crompton Greaves reported FY2018 financial results today. Overall the company's long term financial model is characterised by the following facts:

Crompton Greaves has low CAPEX intensity: 5 year average CAPEX/Revenue was 2.5%. At the same time it's in pair with industry average of 1.6%
CAPEX is quite volatile: ₹1,929m in FY2018, ₹638m in FY2017, ₹1,437m in FY2016, ₹2,086m in FY2015, ₹2,963m in FY2014
The company has potentially unprofitable business model: ROIC is 5.8%
It operates with high leverage: Net Debt/EBITDA is 2.9x while industry average is 1.4x

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 FY2015 at -57.5% and was accelerating since that time. Revenue decline was accompanies by EBITDA margin decline. EBITDA Margin decreased on 7.6 pp from 19.7% to 12.1% in FY2018.

Net Income margin decreased on 9.9 pp from -8.9% to -18.8% in FY2018. Net Income margin stuck to a declining trend at -5.1 pp per annum in the last 5 years.

Investments (CAPEX, working capital and M&A)

In FY2018 Crompton Greaves had CAPEX/Revenue of 3.1%. The company showed almost no change in CAPEX/Revenue from FY2015 to FY2018. For the last three years the average CAPEX/Revenue was 2.3%.

Return on investment

The company operates at low but positive ROIC (5.8%) and negative ROE (-34.2%). ROIC increased slightly on 0.90 pp from 4.9% to 5.8% in FY2018. ROE dropped on 22.9 pp from -11.3% to -34.2% in FY2018. During the last 5 years ROIC bottomed in FY2016 at 3.9% and was growing since that time. ROE stuck to a declining trend at -9.4 pp per annum in FY2014-FY2018.

Leverage (Debt)

Company's Net Debt / EBITDA is 2.9x and Debt / EBITDA is 4.4x. Net Debt / EBITDA surged on 0.9x from 1.9x to 2.9x in FY2018. Debt surged on 23.9% while cash decreased on 8.8%.

Crompton Greaves has short term refinancing risk: cash is only 59.8% of short term debt.

Financial and operational results

FY ended 31-03-2018

Crompton Greaves ($CROMPGREAV) key annual financial indicators

mln. INR	2014	2015	2016	2017	2018	2018/2017
P&L
Revenue	136,315	58,002	55,950	55,165	61,886	12.2%
SG&A		385	400
EBITDA	8,487	5,092	4,302	4,424	4,550	2.8%
Net Income	2,443	235	-4,593	-4,909	-11,639
Balance Sheet
Cash	7,677	6,777	7,952	7,594	6,924	-8.8%
Short Term Debt	7,614	8,150	6,922	11,077	11,588	4.6%
Long Term Debt	16,323	12,772	5,990	5,038	8,372	66.2%
Cash flow
Capex	2,963	2,086	1,437	638	1,929	202.3%
Ratios
Revenue growth	12.7%	-57.5%	-3.5%	-1.4%	12.2%
EBITDA growth	121.5%	-40.0%	-15.5%	2.8%	2.8%

EBITDA Margin	6.2%	8.8%	7.7%	8.0%	7.4%	-0.7%
SG&A, % of revenue		0.7%	0.7%
Net Income Margin	1.8%	0.4%	-8.2%	-8.9%	-18.8%	-9.9%
CAPEX, % of revenue	2.2%	3.6%	2.6%	1.2%	3.1%	2.0%

ROIC	10.1%	4.1%	3.9%	4.9%	5.8%	0.9%
ROE	6.8%	0.6%	-10.3%	-11.3%	-34.2%	-22.9%
Net Debt/EBITDA	1.9x	2.8x	1.2x	1.9x	2.9x	0.9x

Peers in Heavy Electrical Equipment

Below you can find Crompton Greaves benchmarking vs. other companies in Heavy Electrical Equipment 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
Suzlon Energy ($SUZLON)	-	-1.9%	-52.5%	34.6%	-34.7%
Median (1 company)	-0.0%	4.5%	-6.1%	34.6%	-34.7%
Crompton Greaves ($CROMPGREAV)	-	-57.5%	-3.5%	-1.4%	12.2%

Top companies by Gross margin, %


Top	FY2014	FY2015	FY2016	FY2017	FY2018
Suzlon Energy ($SUZLON)	28.6%	31.3%	40.6%	40.6%	38.3%
Median (1 company)	28.6%	31.3%	40.6%	40.6%	38.3%

Top companies by EBITDA margin, %


Top	FY2014	FY2015	FY2016	FY2017	FY2018
Suzlon Energy ($SUZLON)	0.8%	4.0%	11.7%	19.7%	12.1%
Median (1 company)	6.7%	5.5%	8.0%	19.7%	12.1%
Crompton Greaves ($CROMPGREAV)	6.2%	8.8%	7.7%	8.0%	7.4%

Top companies by CAPEX/Revenue, %


Top	FY2014	FY2015	FY2016	FY2017	FY2018
Suzlon Energy ($SUZLON)	3.4%	3.7%	4.3%	3.3%	8.6%
Median (1 company)	2.4%	2.2%	3.0%	3.3%	8.6%
Crompton Greaves ($CROMPGREAV)	2.2%	3.6%	2.6%	1.2%	3.1%

Top companies by ROIC, %


Top	FY2014	FY2015	FY2016	FY2017	FY2018
Suzlon Energy ($SUZLON)	-3.5%	-0.1%	9.4%	106.7%	26.4%
Median (1 company)	7.4%	4.0%	5.7%	106.7%	26.4%
Crompton Greaves ($CROMPGREAV)	10.1%	4.1%	3.9%	4.9%	5.8%

Top companies by Net Debt / EBITDA


Top	FY2014	FY2015	FY2016	FY2017	FY2018
Suzlon Energy ($SUZLON)	87.6x	19.1x	9.5x	2.6x	11.2x
Median (1 company)	2.5x	2.6x	2.1x	2.6x	11.2x
Crompton Greaves ($CROMPGREAV)	1.9x	2.8x	1.2x	1.9x	2.9x

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.