Steel Authority Of India reports 23.3% Net Income decline and 1.9% Revenue decline
29 May 2015 • About Steel Authority Of India (
$SAUD) • By InTwits
Steel Authority Of India reported FY2015 financial results today. Overall the company's long term financial model is characterised by the following facts:
- Steel Authority Of India has high CAPEX intensity: 5 year average CAPEX/Revenue was 20.6%. At the same time it's a lot of higher than industry average of 13.3%.
- CAPEX is quite volatile: 138 in FY2015, 225 in FY2014, 424 in FY2013, 343 in FY2012, 211 in FY2011
- The company has potentially unprofitable business model: ROIC is at 3.9%
- It operates with medium-size leverage: Net Debt/EBITDA is 6.5x while industry average is 6.1x
Below you can find a comprehensive analysis of the key data driving the company's performance and stock price.
Steel Authority Of India ($SAUD) key annual financial indicators
| mln. INR | 2011 | 2012 | 2013 | 2014 | 2015 | 2015/2014 |
|---|
P&L
|
|---|
| Revenue | 428,486 | 460,069 | 444,773 | 464,677 | 455,908 | -1.9% |
| EBITDA | 78,384 | 64,166 | 49,740 | 41,787 | 48,343 | 15.7% |
| Net Income | 50,139 | 35,935 | 23,291 | 26,521 | 20,353 | -23.3% |
Balance Sheet
|
|---|
| Cash | 7,802 | 7,303 | 6,359 | 4,473 | 5,193 | 16.1% |
| Short Term Debt | 46,533 | 50,069 | 83,839 | 118,875 | 164,311 | 38.2% |
| Long Term Debt | 158,218 | 123,983 | 141,549 | 141,330 | 157,152 | 11.2% |
Cash flow
|
|---|
| Capex | 108,522 | 96,324 | 92,164 | 89,563 | 77,043 | -14.0% |
Ratios
|
|---|
| Revenue growth | 5.6% | 7.4% | -3.3% | 4.5% | -1.9% | |
| EBITDA growth | -21.4% | -18.1% | -22.5% | -16.0% | 15.7% | |
| EBITDA Margin | 18.3% | 13.9% | 11.2% | 9.0% | 10.6% | 1.6% |
| Net Income Margin | 11.7% | 7.8% | 5.2% | 5.7% | 4.5% | -1.2% |
| CAPEX, % of revenue | 25.3% | 20.9% | 20.7% | 19.3% | 16.9% | -2.4% |
| ROIC | 11.0% | 7.9% | 5.5% | 3.6% | 3.9% | 0.3% |
| ROE | 14.1% | 9.2% | 5.7% | 6.2% | 4.7% | -1.6% |
| Net Debt/EBITDA | 2.5x | 2.6x | 4.4x | 6.1x | 6.5x | 0.4x |
Revenue and profitability
The company's Revenue decreased slightly on 1.9% in FY2015. Revenue decline happened at the same time with EBITDA margin expansion. EBITDA Margin increased slightly on 1.6 pp from 9.0% to 10.6% in FY2015.
Net Income marign decreased slightly on 1.2 pp from 5.7% to 4.5% in FY2015.
Capital expenditures (CAPEX) and working capital investments
Steel Authority Of India's CAPEX/Revenue was 16.9% in FY2015. CAPEX/Revenue decreased on 4.0 pp from 20.9% in FY2012 to 16.9% in FY2015. It's average CAPEX/Revenue for the last three years was 19.0%.Steel Authority Of India has spent a lot to CAPEX (159% of EBITDA) which didn't stop revenue from falling.
Return on investment
The company operates at low ROIC (3.88%) and ROE (4.68%). ROIC showed almost no change in FY2015. ROE decreased slightly on 1.6 pp from 6.2% to 4.7% in FY2015.
Leverage (Debt)
Debt level is 6.5x Net Debt / EBITDA and 6.6x Debt / EBITDA. Net Debt / EBITDA surged on 0.4x from 6.1x to 6.5x in FY2015. Debt jumped on 23.5% in FY2015 while cash jumped on 16.1% in FY2015.
Appendix 1: Peers in Iron & Steel/Interm.Products
Below you can find Steel Authority Of India benchmarking vs. other companies in Iron & Steel/Interm.Products 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 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Tata Steel ($TTST) | | 12.9% | 0.9% | 10.4% | -6.1% |
| |
|---|
| Median (1 company) | | 12.9% | 0.9% | 10.4% | -6.1% |
|---|
| Steel Authority Of India ($SAUD) | | 7.4% | -3.3% | 4.5% | -1.9% |
Top companies by EBITDA margin, %
| Top | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Tata Steel ($TTST) | 13.7% | 9.4% | 9.2% | 11.1% | 9.1% |
| |
|---|
| Median (1 company) | 13.7% | 9.4% | 9.2% | 11.1% | 9.1% |
|---|
| Steel Authority Of India ($SAUD) | 18.3% | 13.9% | 11.2% | 9.0% | 10.6% |
Top companies by CAPEX/Revenue, %
| Top | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Tata Steel ($TTST) | 8.2% | 9.1% | 11.6% | 11.1% | 9.8% |
| |
|---|
| Median (1 company) | 8.2% | 9.1% | 11.6% | 11.1% | 9.8% |
|---|
| Steel Authority Of India ($SAUD) | 25.3% | 20.9% | 20.7% | 19.3% | 16.9% |
Top companies by ROIC, %
| Top | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Tata Steel ($TTST) | 12.8% | 7.6% | 6.2% | 8.9% | 5.4% |
| |
|---|
| Median (1 company) | 12.8% | 7.6% | 6.2% | 8.9% | 5.4% |
|---|
| Steel Authority Of India ($SAUD) | 11.0% | 7.9% | 5.5% | 3.6% | 3.9% |
Top companies by Net Debt / EBITDA
| Top | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Tata Steel ($TTST) | 3.1x | 4.0x | 4.8x | 4.4x | 5.7x |
| |
|---|
| Median (1 company) | 3.1x | 4.0x | 4.8x | 4.4x | 5.7x |
|---|
| Steel Authority Of India ($SAUD) | 2.5x | 2.6x | 4.4x | 6.1x | 6.5x |
