Suzlon Energy reports 144% Net Income decline in 2018 and 7.6 pp EBITDA Margin decline from 19.7% to 12.1%
30-05-2018 • About Suzlon Energy (
$SUZLON) • By InTwits
Suzlon Energy reported FY2018 financial results today. Overall the company's long term financial model is characterised by the following facts:
- Suzlon Energy is a company in decline: FY2018 revenue growth was -34.7%, 5 years revenue CAGR was -15.0%
- EBITDA Margin is quite volatile: 12.1% in FY2018, 19.7% in FY2017, 11.7% in FY2016, 4.0% in FY2015, 0.8% in FY2014
- Suzlon Energy has low CAPEX intensity: 5 year average CAPEX/Revenue was 4.7%. At the same time it's in pair with industry average of 6.2%
- CAPEX is quite volatile: ₹8,550m in FY2018, ₹7,737m in FY2017, ₹14,944m in FY2016, ₹5,386m in FY2015, ₹6,078m in FY2014
- The company has highly profitable business model: ROIC is 26.4%
- It operates with high leverage: Net Debt/EBITDA is 11.2x 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 dropped on 34.7%. Revenue decline was worsened by EBITDA margin decline. EBITDA Margin decreased on 7.6 pp from 19.7% to 12.1% in FY2018. During the last 5 years EBITDA Margin topped in FY2017 at 19.7%.
Gross Margin decreased on 2.3 pp from 40.6% to 38.3% in FY2018. During FY2014-FY2018 Gross Margin topped in FY2016 at 40.6% and was declining since that time.
Net Income margin dropped on 11.3 pp from 6.8% to -4.5% in FY2018.
Investments (CAPEX, working capital and M&A)
In FY2018 Suzlon Energy had CAPEX/Revenue of 8.6%. The company showed CAPEX/Revenue growth of 4.8 pp from 3.7% in FY2015 to 8.6% in FY2018. It's average CAPEX/Revenue for the last three years was 5.4%. The company invested a big chunk of EBITDA (70.7%) to CAPEX which didn't stop revenue from falling.
Leverage (Debt)
Company's Net Debt / EBITDA is 11.2x and Debt / EBITDA is 11.6x. Net Debt / EBITDA surged on 8.5x from 2.6x to 11.2x in FY2018. Debt surged on 67.8% while cash jumped on 19.0%. During the last 5 years Net Debt/EBITDA bottomed in FY2017 at 2.6x.
Suzlon Energy has short term refinancing risk: cash is only 10.3% of short term debt.
Financial and operational results
FY ended 31-03-2018
Suzlon Energy ($SUZLON) key annual financial indicators| mln. INR | 2014 | 2015 | 2016 | 2017 | 2018 | 2018/2017 |
|---|
P&L
|
|---|
| Revenue | 202,116 | 198,367 | 94,296 | 126,925 | 82,923 | -34.7% |
| Gross Profit | 57,762 | 62,180 | 38,258 | 51,496 | 31,765 | -38.3% |
| EBITDA | 1,668 | 8,011 | 11,018 | 24,994 | 10,031 | -59.9% |
| Net Income | -33,768 | -91,577 | 5,831 | 8,577 | -3,770 | -144.0% |
Balance Sheet
|
|---|
| Cash | 24,479 | 25,428 | 6,266 | 3,361 | 4,001 | 19.0% |
| Short Term Debt | 54,124 | 70,244 | 18,949 | 20,764 | 38,895 | 87.3% |
| Long Term Debt | 116,409 | 107,866 | 92,246 | 48,410 | 77,157 | 59.4% |
Cash flow
|
|---|
| Capex | 6,905 | 7,363 | 4,073 | 4,140 | 7,096 | 71.4% |
Ratios
|
|---|
| Revenue growth | 7.8% | -1.9% | -52.5% | 34.6% | -34.7% | |
| EBITDA growth | -116.9% | 380.3% | 37.5% | 126.8% | -59.9% | |
|
|---|
| Gross Margin | 28.6% | 31.3% | 40.6% | 40.6% | 38.3% | -2.3% |
| EBITDA Margin | 0.8% | 4.0% | 11.7% | 19.7% | 12.1% | -7.6% |
| Net Income Margin | -16.7% | -46.2% | 6.2% | 6.8% | -4.5% | -11.3% |
| CAPEX, % of revenue | 3.4% | 3.7% | 4.3% | 3.3% | 8.6% | 5.3% |
|
|---|
| ROIC | -3.5% | -0.1% | 9.4% | 106.7% | 26.4% | -80.2% |
| Net Debt/EBITDA | 87.6x | 19.1x | 9.5x | 2.6x | 11.2x | 8.5x |
Peers in Heavy Electrical Equipment
Below we provide Suzlon Energy 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 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Crompton Greaves ($CROMPGREAV) | - | -57.5% | -3.5% | -1.4% | 12.2% |
| |
|---|
| Median (1 company) | -0.0% | 4.5% | -5.3% | -1.4% | 12.2% |
|---|
| Suzlon Energy ($SUZLON) | - | -1.9% | -52.5% | 34.6% | -34.7% |
Top companies by EBITDA margin, %
| Top | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Crompton Greaves ($CROMPGREAV) | 6.2% | 8.8% | 7.7% | 8.0% | 7.4% |
| |
|---|
| Median (1 company) | 6.7% | 7.1% | 7.7% | 8.0% | 7.4% |
|---|
| Suzlon Energy ($SUZLON) | 0.8% | 4.0% | 11.7% | 19.7% | 12.1% |
Top companies by CAPEX/Revenue, %
| Top | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Crompton Greaves ($CROMPGREAV) | 2.2% | 3.6% | 2.6% | 1.2% | 3.1% |
| |
|---|
| Median (1 company) | 2.4% | 2.2% | 2.6% | 1.2% | 3.1% |
|---|
| Suzlon Energy ($SUZLON) | 3.4% | 3.7% | 4.3% | 3.3% | 8.6% |
Top companies by ROIC, %
| Top | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Crompton Greaves ($CROMPGREAV) | 10.1% | 4.1% | 3.9% | 4.9% | 5.8% |
| |
|---|
| Median (1 company) | 9.3% | 4.1% | 4.0% | 4.9% | 5.8% |
|---|
| Suzlon Energy ($SUZLON) | -3.5% | -0.1% | 9.4% | 106.7% | 26.4% |
Top companies by Net Debt / EBITDA
| Top | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Crompton Greaves ($CROMPGREAV) | 1.9x | 2.8x | 1.2x | 1.9x | 2.9x |
| |
|---|
| Median (1 company) | 2.5x | 2.6x | 1.9x | 1.9x | 2.9x |
|---|
| Suzlon Energy ($SUZLON) | 87.6x | 19.1x | 9.5x | 2.6x | 11.2x |
