Larsen & Toubro CAPEX dropped on 15.8% in 2016 while Revenue jumped on 13.1%
25 May 2016 • About Larsen & Toubro (
$LTOD) • By InTwits
Larsen & Toubro reported FY2016 financial results today. Overall the company's long term financial model is characterised by the following facts:
- Larsen & Toubro has medium CAPEX intensity: 5 year average CAPEX/Revenue was 8.5%. At the same time it's a lot of higher than industry average of 6.2%.
- CAPEX is quite volatile: 81,700 in 2016, 51,100 in 2015, 53,600 in 2014, 34,500 in 2013, 26,300 in 2012
- The company has potentially unprofitable business model: ROIC is at 6.7%
- It operates with medium-size leverage: Net Debt/EBITDA is 7.7x while industry average is 7.7x
Below you can find a comprehensive analysis of the key data driving the company's performance and stock price.
Larsen & Toubro ($LTOD) key annual financial indicators
| mln. INR | 2012 | 2013 | 2014 | 2015 | 2016 | 2016/2015 |
|---|
P&L
|
|---|
| Revenue | 637,314 | 739,979 | 844,936 | 895,897 | 1,013,361 | 13.1% |
| EBITDA | 93,121 | 102,967 | 110,951 | 114,464 | 125,041 | 9.2% |
| Net Income | 46,937 | 52,057 | 49,020 | 47,648 | 50,905 | 6.8% |
Balance Sheet
|
|---|
| Cash | 33,486 | 35,275 | 40,597 | 57,120 | 58,448 | 2.3% |
| Short Term Debt | 109,578 | 157,520 | 254,006 | 251,608 | 277,634 | 10.3% |
| Long Term Debt | 366,564 | 473,921 | 554,449 | 655,372 | 737,537 | 12.5% |
Cash flow
|
|---|
| Capex | 73,024 | 78,323 | 69,673 | 62,525 | 52,641 | -15.8% |
Ratios
|
|---|
| Revenue growth | 23.5% | 16.1% | 14.2% | 6.0% | 13.1% | |
| EBITDA growth | 18.5% | 10.6% | 7.8% | 3.2% | 9.2% | |
| EBITDA Margin | 14.6% | 13.9% | 13.1% | 12.8% | 12.3% | -0.4% |
| Net Income Margin | 7.4% | 7.0% | 5.8% | 5.3% | 5.0% | -0.3% |
| CAPEX, % of revenue | 11.5% | 10.6% | 8.2% | 7.0% | 5.2% | -1.8% |
| ROIC | 11.1% | 9.6% | 8.6% | 6.8% | 6.7% | -0.1% |
| ROE | 17.2% | 16.5% | 13.7% | 12.1% | 12.0% | -0.1% |
| Net Debt/EBITDA | 4.8x | 5.8x | 6.9x | 7.4x | 7.7x | 0.2x |
Revenue and profitability
The company's Revenue jumped on 13.1% in FY2016. Having declining revenue the company managed to increase EBITDA margin. EBITDA Margin increased slightly on 1.0 pp from 8.6% to 9.6% in 2016.
Net Income marign showed almost no change in FY2016.
Capital expenditures (CAPEX) and working capital investments
In FY2016 the company had CAPEX/Revenue of 5.2%. The company's CAPEX/Revenue decreased on 5.4 pp from 10.6% in FY2013 to 5.2% in FY2016. It's average level of CAPEX/Revenue for the last three years was 6.8%.
Return on investment
The company operates at low ROIC (6.71%) and ROE (11.99%). ROIC showed almost no change in FY2016. ROE showed almost no change in FY2016.
Leverage (Debt)
Company's Net Debt / EBITDA is 7.7x and Debt / EBITDA is 8.1x. Net Debt / EBITDA surged on 0.2x from 7.4x to 7.7x in FY2016. Debt surged on 11.9% in FY2016 while cash increased on 2.3% in FY2016.
Appendix 1: Peers in Construction & Engineering
Below we provide Larsen & Toubro benchmarking against other companies in Construction & Engineering 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 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Electrosteel Castings ($ECS) | | 5.3% | 11.1% | -2.3% | -11.7% |
| Hindustan Construction Co ($HIN) | | 4.3% | 13.6% | 7.1% | -15.3% |
| |
|---|
| Median (2 companies) | | 4.8% | 12.3% | 2.4% | -13.5% |
|---|
| Larsen & Toubro ($LTOD) | | 16.1% | 14.2% | 6.0% | 13.1% |
Top companies by EBITDA margin, %
| Top | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Hindustan Construction Co ($HIN) | 5.3% | 5.3% | 8.8% | 12.0% | 13.9% |
| Electrosteel Castings ($ECS) | 9.9% | 8.9% | 14.4% | 12.8% | 13.6% |
| |
|---|
| Median (2 companies) | 7.6% | 7.1% | 11.6% | 12.4% | 13.8% |
|---|
| Larsen & Toubro ($LTOD) | 14.6% | 13.9% | 13.1% | 12.8% | 12.3% |
Top companies by CAPEX/Revenue, %
| Top | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Hindustan Construction Co ($HIN) | 12.7% | 12.4% | 13.3% | 9.2% | 11.5% |
| Electrosteel Castings ($ECS) | 11.9% | 13.7% | 6.6% | 5.8% | 2.0% |
| |
|---|
| Median (2 companies) | 12.3% | 13.0% | 10.0% | 7.5% | 6.8% |
|---|
| Larsen & Toubro ($LTOD) | 11.5% | 10.6% | 8.2% | 7.0% | 5.2% |
Top companies by ROIC, %
| Top | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Hindustan Construction Co ($HIN) | 1.9% | 1.3% | 4.8% | 7.4% | 6.9% |
| Electrosteel Castings ($ECS) | 4.3% | 3.4% | 6.3% | 5.0% | 5.1% |
| |
|---|
| Median (2 companies) | 3.1% | 2.4% | 5.5% | 6.2% | 6.0% |
|---|
| Larsen & Toubro ($LTOD) | 11.1% | 9.6% | 8.6% | 6.8% | 6.7% |
Top companies by Net Debt / EBITDA
| Top | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Hindustan Construction Co ($HIN) | 18.8x | 20.3x | 12.3x | 9.3x | 8.8x |
| Electrosteel Castings ($ECS) | 9.0x | 11.6x | 6.9x | 8.0x | 6.6x |
| |
|---|
| Median (2 companies) | 13.9x | 15.9x | 9.6x | 8.6x | 7.7x |
|---|
| Larsen & Toubro ($LTOD) | 4.8x | 5.8x | 6.9x | 7.4x | 7.7x |
