Tata Power Co reports 176% Net Income growth in 2018 and almost no change in EBITDA Margin of 22.2%
02 May 2018 • About Tata Power Co (
$TPCL) • By InTwits
Tata Power Co reported FY2018 financial results today. Overall the company's long term financial model is characterised by the following facts:
- Tata Power Co has high CAPEX intensity: 5 year average CAPEX/Revenue was 10.8%. At the same time it's in pair with industry average of 9.1%
- 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 potentially unprofitable business model: ROIC is 6.1%
- It operates with high leverage: Net Debt/EBITDA is 7.3x while industry average is 5.4x
Below you can find a comprehensive analysis of the key data driving the company's performance and the stock price.
Revenue and profitability
Tata Power Co's Revenue increased on 6.3%. During the last 5 years Revenue growth bottomed in FY2016 at -12.5% and was accelerating since that time. Despite revenue decline the EBITDA margin expanded. EBITDA Margin increased on 3.4 pp from 2.2% to 5.6% in 2018.
Net Income margin increased on 5.2 pp from 3.2% to 8.4% in FY2018. Net Income margin followed a growing trend at 2.1 pp per annum in the last 5 years.
Investments (CAPEX, working capital and M&A)
Tata Power Co's CAPEX/Revenue was 12.1% in FY2018. The company's CAPEX/Revenue increased slightly on 1.8 pp from 10.4% in FY2015 to 12.1% in FY2018. Average CAPEX/Revenue for the last three years was 10.5%. Tata Power Co invested a large share of EBITDA (54.8%) to CAPEX. During the last 5 years CAPEX as a % of Revenue bottomed in FY2016 at 7.4% and was growing since that time.
Return on investment
The company operates at good ROE (15.0%) while ROIC is low (6.1%). ROIC decreased slightly on 0.55 pp from 6.6% to 6.1% in FY2018. ROE increased on 8.6 pp from 6.4% to 15.0% in FY2018. ROE grew at 4.2 pp per annum in the last 5 years.
Leverage (Debt)
Debt level is 7.3x Net Debt / EBITDA and 7.5x Debt / EBITDA. Net Debt / EBITDA dropped on 0.5x from 7.8x to 7.3x in FY2018. Debt increased slightly on 1.1% while cash jumped on 24.5%.
Tata Power Co has short term refinancing risk: cash is only 4.5% of short term debt.
Valuation and dividends
Tata Power Co's trades at EV/EBITDA 7.3x and P/E 0.0x.
Financial and operational results
FY ended 31 Mar 2018
Tata Power Co ($TPCL) key annual financial indicators| mln. INR | 2014 | 2015 | 2016 | 2017 | 2018 | 2018/2017 |
|---|
P&L
|
|---|
| Revenue | 358,677 | 337,199 | 295,009 | 275,876 | 293,312 | 6.3% |
| SG&A | 7,560 | 7,278 | 5,348 | | | |
| EBITDA | 77,011 | 62,936 | 78,290 | 60,534 | 65,024 | 7.4% |
| Net Income | -2,600 | 1,678 | 6,622 | 8,966 | 24,766 | 176.2% |
Balance Sheet
|
|---|
| Cash | 15,550 | 14,835 | 6,517 | 9,417 | 11,722 | 24.5% |
| Short Term Debt | 97,026 | 82,136 | 164,347 | 236,725 | 262,329 | 10.8% |
| Long Term Debt | 304,699 | 323,931 | 224,139 | 243,725 | 223,563 | -8.3% |
Cash flow
|
|---|
| Capex | 43,361 | 34,936 | 21,769 | 33,223 | 35,604 | 7.2% |
Ratios
|
|---|
| Revenue growth | 8.6% | -6.0% | -12.5% | -6.5% | 6.3% | |
| EBITDA growth | 16.2% | -18.3% | 24.4% | -22.7% | 7.4% | |
|
|---|
| EBITDA Margin | 21.5% | 18.7% | 26.5% | 21.9% | 22.2% | 0.2% |
| SG&A, % of revenue | 2.1% | 2.2% | 1.8% | | | |
| Net Income Margin | -0.7% | 0.5% | 2.2% | 3.2% | 8.4% | 5.2% |
| CAPEX, % of revenue | 12.1% | 10.4% | 7.4% | 12.0% | 12.1% | 0.1% |
|
|---|
| ROIC | 9.0% | 7.1% | 10.6% | 6.6% | 6.1% | -0.5% |
| ROE | -3.0% | 0.3% | 4.0% | 6.4% | 15.0% | 8.6% |
| Net Debt/EBITDA | 5.0x | 6.2x | 4.9x | 7.8x | 7.3x | -0.5x |
Peers in Electric Utilities
Below we provide Tata Power Co benchmarking against other companies in Electric Utilities 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 |
|---|
| Reliance Infrastructure ($RIFS) | | -8.6% | 112.0% | -6.7% | 2.4% |
| |
|---|
| Median (1 company) | | -8.6% | 112.0% | -6.7% | 2.4% |
|---|
| Tata Power Co ($TPCL) | | -6.0% | -12.5% | -6.5% | 6.3% |
Top companies by EBITDA margin, %
| Top | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Reliance Infrastructure ($RIFS) | 21.1% | 19.0% | 20.2% | 19.5% | 24.5% |
| |
|---|
| Median (1 company) | 21.1% | 19.0% | 20.2% | 19.5% | 24.5% |
|---|
| Tata Power Co ($TPCL) | 21.5% | 18.7% | 26.5% | 21.9% | 22.2% |
Top companies by CAPEX/Revenue, %
| Top | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Reliance Infrastructure ($RIFS) | | | 9.9% | 4.7% | 6.0% |
| |
|---|
| Median (1 company) | | | 9.9% | 4.7% | 6.0% |
|---|
| Tata Power Co ($TPCL) | 12.1% | 10.4% | 7.4% | 12.0% | 12.1% |
Top companies by ROIC, %
| Top | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Reliance Infrastructure ($RIFS) | 4.5% | 2.8% | 6.5% | 5.3% | 7.7% |
| |
|---|
| Median (1 company) | 4.5% | 2.8% | 6.5% | 5.3% | 7.7% |
|---|
| Tata Power Co ($TPCL) | 9.0% | 7.1% | 10.6% | 6.6% | 6.1% |
Top companies by Net Debt / EBITDA
| Top | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Reliance Infrastructure ($RIFS) | 8.4x | 10.9x | 5.8x | 5.2x | 3.6x |
| |
|---|
| Median (1 company) | 8.4x | 10.9x | 5.8x | 5.2x | 3.6x |
|---|
| Tata Power Co ($TPCL) | 5.0x | 6.2x | 4.9x | 7.8x | 7.3x |
