Crompton Greaves reports 57.5% revenue decline in FY2015 and 2.6 pp EBITDA Margin growth from 6.2% to 8.8%

28 May 2015 • About Crompton Greaves ($CGVD) • By InTwits

Crompton Greaves reported FY2015 financial results today. Overall the company's long term financial model is characterised by the following facts:

Crompton Greaves is a company in decline: FY2015 revenue growth was -57.5%, 5 years revenue CAGR was -8.7%
EBITDA Margin is quite volatile: 8.8% in FY2015, 6.2% in FY2014, 3.2% in FY2013, 7.1% in FY2012, 13.1% in FY2011
Crompton Greaves has low CAPEX intensity: 5 year average CAPEX/Revenue was 3.7%. At the same time it's in pair with industry average of 3.5%.
CAPEX is quite volatile: 2,086 in FY2015, 2,963 in FY2014, 2,204 in FY2013, 3,724 in FY2012, 7,461 in FY2011
The company has potentially unprofitable business model: ROIC is at 4.1%

Below you can find a comprehensive analysis of the key data driving the company's performance and stock price.

Crompton Greaves ($CGVD) key annual financial indicators

mln. INR	2011	2012	2013	2014	2015	2015/2014
P&L
Revenue	100,051	112,486	120,944	136,315	58,002	-57.5%
SG&A	8,952				385
EBITDA	13,067	8,036	3,832	8,487	5,092	-40.0%
Net Income	8,887	3,736	-361	2,443	235	-90.4%
Balance Sheet
Cash	2,582	4,701	5,233	7,677	6,777	-11.7%
Short Term Debt	924	3,686	4,720	7,614	8,150	7.0%
Long Term Debt	3,008	6,142	15,550	16,323	12,772	-21.8%
Cash flow
Capex	7,461	3,724	2,204	2,963	2,086	-29.6%
Ratios
Revenue growth	9.5%	12.4%	7.5%	12.7%	-57.5%
EBITDA growth	4.9%	-38.5%	-52.3%	121.5%	-40.0%
EBITDA Margin	13.1%	7.1%	3.2%	6.2%	8.8%	2.6%
Net Income Margin	8.9%	3.3%	-0.3%	1.8%	0.4%	-1.4%
SG&A, % of revenue	8.9%				0.7%	0.7%
CAPEX, % of revenue	7.5%	3.3%	1.8%	2.2%	3.6%	1.4%
ROIC	32.5%	12.9%	3.5%	10.1%	4.1%	-6.0%
ROE	30.8%	10.9%	-1.0%	6.8%	0.6%	-6.2%
Net Debt/EBITDA	0.1x	0.6x	3.9x	1.9x	2.8x	0.9x

Revenue and profitability

Crompton Greaves's Revenue dropped on 57.5% in FY2015. Having declining revenue the company managed to increase EBITDA margin. EBITDA Margin increased on 2.6 pp from 6.2% to 8.8% in FY2015.

Net Income marign decreased slightly on 1.4 pp from 1.8% to 0.40% in FY2015.

Capital expenditures (CAPEX) and working capital investments

In FY2015 the company had CAPEX/Revenue of 3.6%. CAPEX/Revenue showed almost no change from FY2012 to FY2015. Average CAPEX/Revenue for the last three years was 2.5%.

Return on investment

The company operates at low ROIC (4.06%) and ROE (0.59%). ROIC decreased on 6.0 pp from 10.1% to 4.1% in FY2015. ROE decreased on 6.2 pp from 6.8% to 0.59% in FY2015.

Leverage (Debt)

Company's Net Debt / EBITDA is 2.8x and Debt / EBITDA is 4.1x. Net Debt / EBITDA jumped on 0.9x from 1.9x to 2.8x in FY2015. Debt dropped on 12.6% in FY2015 while cash dropped on 11.7% in FY2015.

Appendix 1: Peers in Heavy Electrical Equipment

Below we provide Crompton Greaves 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	FY2011	FY2012	FY2013	FY2014	FY2015
Suzlon Energy ($SUEL)	-13.3%	17.9%	-11.1%	7.8%
Median (1 company)	-13.3%	17.9%	-11.1%	7.8%
Crompton Greaves ($CGVD)		12.4%	7.5%	12.7%	-57.5%

Top companies by Gross margin, %


Top	FY2011	FY2012	FY2013	FY2014	FY2015
Suzlon Energy ($SUEL)	30.3%	33.2%	27.2%	28.6%
Median (1 company)	30.3%	33.2%	27.2%	28.6%

Top companies by EBITDA margin, %


Top	FY2011	FY2012	FY2013	FY2014	FY2015
Suzlon Energy ($SUEL)	5.5%	8.9%	-5.3%	0.8%
Median (1 company)	5.5%	8.9%	-5.3%	0.8%
Crompton Greaves ($CGVD)	13.1%	7.1%	3.2%	6.2%	8.8%

Top companies by CAPEX/Revenue, %


Top	FY2011	FY2012	FY2013	FY2014	FY2015
Suzlon Energy ($SUEL)	4.6%	4.2%	3.7%	3.4%
Median (1 company)	4.6%	4.2%	3.7%	3.4%
Crompton Greaves ($CGVD)	7.5%	3.3%	1.8%	2.2%	3.6%

Top companies by ROIC, %


Top	FY2011	FY2012	FY2013	FY2014	FY2015
Suzlon Energy ($SUEL)	1.7%	6.2%	-9.4%	-3.5%
Median (1 company)	1.7%	6.2%	-9.4%	-3.5%
Crompton Greaves ($CGVD)	32.5%	12.9%	3.5%	10.1%	4.1%

Top companies by Net Debt / EBITDA


Top	FY2011	FY2012	FY2013	FY2014	FY2015
Suzlon Energy ($SUEL)	9.7x	6.1x		87.6x
Median (1 company)	9.7x	6.1x		87.6x
Crompton Greaves ($CGVD)	0.1x	0.6x	3.9x	1.9x	2.8x

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.