Larsen & Toubro Debt surged on 12.2% in 2015 and EBITDA increased on 3.2%
30 May 2015 • About Larsen & Toubro (
$LTOD) • By InTwits
Larsen & Toubro reported FY2015 financial results today. Overall the company's long term financial model is characterised by the following facts:
- Larsen & Toubro has high CAPEX intensity: 5 year average CAPEX/Revenue was 10.3%. At the same time it's a lot of higher than industry average of 7.3%.
- CAPEX is quite volatile: 349,036 in 2015, 271,330 in 2014, 208,611 in 2013, 169,213 in 2012, 118,449 in 2011
- The company has potentially unprofitable business model: ROIC is at 6.8%
- It operates with medium-size leverage: Net Debt/EBITDA is 7.4x while industry average is 8.2x
Below you can find a comprehensive analysis of the key data driving the company's performance and stock price.
Larsen & Toubro ($LTOD) key annual financial indicators
| mln. INR | 2011 | 2012 | 2013 | 2014 | 2015 | 2015/2014 |
|---|
P&L
|
|---|
| Revenue | 516,139 | 637,314 | 739,979 | 844,936 | 895,897 | 6.0% |
| EBITDA | 78,610 | 93,121 | 102,967 | 110,951 | 114,464 | 3.2% |
| Net Income | 44,562 | 46,937 | 52,057 | 49,020 | 47,648 | -2.8% |
Balance Sheet
|
|---|
| Cash | 36,285 | 33,486 | 35,275 | 40,597 | 57,120 | 40.7% |
| Short Term Debt | 80,512 | 109,578 | 157,520 | 254,006 | 251,608 | -0.9% |
| Long Term Debt | 248,411 | 366,564 | 473,921 | 554,449 | 655,372 | 18.2% |
Cash flow
|
|---|
| Capex | 73,092 | 73,024 | 78,323 | 69,673 | 62,525 | -10.3% |
Ratios
|
|---|
| Revenue growth | 18.6% | 23.5% | 16.1% | 14.2% | 6.0% | |
| EBITDA growth | 22.4% | 18.5% | 10.6% | 7.8% | 3.2% | |
| EBITDA Margin | 15.2% | 14.6% | 13.9% | 13.1% | 12.8% | -0.4% |
| Net Income Margin | 8.6% | 7.4% | 7.0% | 5.8% | 5.3% | -0.5% |
| CAPEX, % of revenue | 14.2% | 11.5% | 10.6% | 8.2% | 7.0% | -1.3% |
| ROIC | 12.3% | 11.1% | 9.6% | 8.6% | 6.8% | -1.9% |
| ROE | 19.4% | 17.2% | 16.5% | 13.7% | 12.1% | -1.6% |
| Net Debt/EBITDA | 3.7x | 4.8x | 5.8x | 6.9x | 7.4x | 0.5x |
Revenue and profitability
Larsen & Toubro's Revenue increased on 6.0% in FY2015. EBITDA Margin showed almost no change in FY2015.
Net Income marign showed almost no change in FY2015.
Capital expenditures (CAPEX) and working capital investments
Larsen & Toubro's CAPEX/Revenue was 7.0% in FY2015. CAPEX/Revenue decreased on 4.5 pp from 11.5% in FY2012 to 7.0% in FY2015. It's average CAPEX/Revenue for the last three years was 8.6%.The company maintained rich investment policy and has spent a big chunk of EBITDA (54.6%) to CAPEX.
Return on investment
The company operates at good ROE (12.12%) while ROIC is low (6.79%). ROIC decreased slightly on 1.9 pp from 8.6% to 6.8% in FY2015. ROE decreased slightly on 1.6 pp from 13.7% to 12.1% in FY2015.
Leverage (Debt)
Company's Net Debt / EBITDA is 7.4x and Debt / EBITDA is 7.9x. Net Debt / EBITDA surged on 0.5x from 6.9x to 7.4x in FY2015. Debt jumped on 12.2% in FY2015 while cash surged on 40.7% in FY2015.
Appendix 1: Peers in Construction & Engineering
Below you can find Larsen & Toubro benchmarking vs. other companies in Construction & Engineering 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 |
|---|
| Hindustan Construction Co ($HIN) | | 14.0% | 4.3% | 13.6% | 7.1% |
| Electrosteel Castings ($ECS) | | 12.4% | 5.3% | 11.1% | -2.3% |
| |
|---|
| Median (2 companies) | | 13.2% | 4.8% | 12.3% | 2.4% |
|---|
| Larsen & Toubro ($LTOD) | | 23.5% | 16.1% | 14.2% | 6.0% |
Top companies by EBITDA margin, %
| Top | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Electrosteel Castings ($ECS) | 14.4% | 9.9% | 8.9% | 14.4% | 12.8% |
| Hindustan Construction Co ($HIN) | 8.7% | 5.3% | 5.3% | 8.8% | 12.0% |
| |
|---|
| Median (2 companies) | 11.6% | 7.6% | 7.1% | 11.6% | 12.4% |
|---|
| Larsen & Toubro ($LTOD) | 15.2% | 14.6% | 13.9% | 13.1% | 12.8% |
Top companies by CAPEX/Revenue, %
| Top | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Hindustan Construction Co ($HIN) | 21.9% | 12.7% | 12.4% | 13.3% | 9.2% |
| Electrosteel Castings ($ECS) | 6.6% | 11.9% | 13.7% | 6.6% | 5.8% |
| |
|---|
| Median (2 companies) | 14.2% | 12.3% | 13.0% | 10.0% | 7.5% |
|---|
| Larsen & Toubro ($LTOD) | 14.2% | 11.5% | 10.6% | 8.2% | 7.0% |
Top companies by ROIC, %
| Top | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Hindustan Construction Co ($HIN) | 5.2% | 1.9% | 1.3% | 4.8% | 7.4% |
| Electrosteel Castings ($ECS) | 6.7% | 4.3% | 3.4% | 6.3% | 5.0% |
| |
|---|
| Median (2 companies) | 6.0% | 3.1% | 2.4% | 5.5% | 6.2% |
|---|
| Larsen & Toubro ($LTOD) | 12.3% | 11.1% | 9.6% | 8.6% | 6.8% |
Top companies by Net Debt / EBITDA
| Top | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Hindustan Construction Co ($HIN) | 10.0x | 18.8x | 20.3x | 12.3x | 9.3x |
| Electrosteel Castings ($ECS) | 5.7x | 9.0x | 11.6x | 6.9x | 8.0x |
| |
|---|
| Median (2 companies) | 7.8x | 13.9x | 15.9x | 9.6x | 8.6x |
|---|
| Larsen & Toubro ($LTOD) | 3.7x | 4.8x | 5.8x | 6.9x | 7.4x |
