Electrosteel Castings Debt dropped on 24.6% while Revenue increased on 3.6%
15 May 2018 • About Electrosteel Castings (
$ECS) • By InTwits
Electrosteel Castings reported FY2018 financial results today. Overall the company's long term financial model is characterised by the following facts:
- Electrosteel Castings has low CAPEX intensity: 5 year average CAPEX/Revenue was 3.5%. At the same time it's a lot of higher than industry average of 1.8%.
- CAPEX is quite volatile: ₹309m in FY2018, ₹318m in FY2017, ₹382m in FY2016, ₹1,386m in FY2015, ₹1,625m in FY2014
- The company has potentially unprofitable business model: ROIC is 4.5%
- It operates with high leverage: Net Debt/EBITDA is 4.6x while industry average is 4.0x
Below you can find a comprehensive analysis of the key data driving the company's performance and the stock price.
Revenue and profitability
Electrosteel Castings's Revenue increased on 3.6%. During FY2014-FY2018 Revenue growth bottomed in FY2016 at -8.2% and was accelerating since that time. Having declining revenue the company managed to increase EBITDA margin. EBITDA Margin increased on 3.4 pp from 2.2% to 5.6% in 2018.
Net Income margin decreased slightly on 1.2 pp from 6.9% to 5.8% in FY2018.
Investments (CAPEX, working capital and M&A)
In FY2018 the company had CAPEX/Revenue of 1.4%. The company's CAPEX/Revenue decreased on 4.3 pp from 5.8% in FY2015 to 1.4% in FY2018. For the last three years the average CAPEX/Revenue was 1.6%. CAPEX as a % of Revenue declined at -1.5 pp per annum in FY2014-FY2018.
Return on investment
The company operates at low ROIC (4.5%) and ROE (5.1%). ROIC showed almost no change in FY2018. ROE decreased slightly on 0.81 pp from 5.9% to 5.1% in FY2018.
Leverage (Debt)
Debt level is 4.6x Net Debt / EBITDA and 5.4x Debt / EBITDA. Net Debt / EBITDA dropped on 0.6x from 5.2x to 4.6x in FY2018. Debt dropped on 24.6% while cash dropped on 36.9%. During FY2014-FY2018 Net Debt/EBITDA topped in FY2015 at 8.0x and was declining since that time.
Electrosteel Castings has short term refinancing risk: cash is only 41.0% of short term debt.
Financial and operational results
FY ended 31 Mar 2018
Electrosteel Castings ($ECS) key annual financial indicators| mln. INR | 2014 | 2015 | 2016 | 2017 | 2018 | 2018/2017 |
|---|
P&L
|
|---|
| Revenue | 23,674 | 24,018 | 22,042 | 20,785 | 21,534 | 3.6% |
| EBITDA | 3,546 | 3,085 | 2,709 | 2,882 | 2,573 | -10.7% |
| Net Income | -159 | -1,161 | -274 | 1,441 | 1,240 | -13.9% |
Balance Sheet
|
|---|
| Cash | 1,250 | 1,179 | 1,403 | 3,566 | 2,251 | -36.9% |
| Short Term Debt | 10,173 | 12,753 | 8,622 | 7,193 | 5,487 | -23.7% |
| Long Term Debt | 15,533 | 12,967 | 11,525 | 11,350 | 8,486 | -25.2% |
Cash flow
|
|---|
| Capex | 1,625 | 1,386 | 382 | 318 | 309 | -2.7% |
Ratios
|
|---|
| Revenue growth | 9.9% | 1.5% | -8.2% | -5.7% | 3.6% | |
| EBITDA growth | 79.0% | -13.0% | -12.2% | 6.4% | -10.7% | |
|
|---|
| EBITDA Margin | 15.0% | 12.8% | 12.3% | 13.9% | 11.9% | -1.9% |
| Net Income Margin | -0.7% | -4.8% | -1.2% | 6.9% | 5.8% | -1.2% |
| CAPEX, % of revenue | 6.9% | 5.8% | 1.7% | 1.5% | 1.4% | -0.1% |
|
|---|
| ROIC | 6.3% | 5.0% | 4.6% | 4.6% | 4.5% | -0.2% |
| ROE | -0.7% | -5.4% | -1.2% | 5.9% | 5.1% | -0.8% |
| Net Debt/EBITDA | 6.9x | 8.0x | 6.9x | 5.2x | 4.6x | -0.6x |
Peers in Construction & Engineering
Below you can find Electrosteel Castings 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 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Hindustan Construction Co ($HIN) | | 7.9% | -17.5% | 15.5% | 2.7% |
| Larsen & Toubro ($LTOD) | 14.2% | 6.0% | 11.7% | 7.6% | |
| Nexus Infrastructure Plc ($NEXS) | 31.1% | 20.8% | 3.7% | -0.5% | |
| |
|---|
| Median (3 companies) | 22.6% | 7.9% | 3.7% | 7.6% | 2.7% |
|---|
| Electrosteel Castings ($ECS) | | 1.5% | -8.2% | -5.7% | 3.6% |
Top companies by Gross margin, %
| Top | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Nexus Infrastructure Plc ($NEXS) | 15.9% | 15.8% | 19.4% | 20.2% | |
| |
|---|
| Median (1 company) | 15.9% | 15.8% | 19.4% | 20.2% | |
|---|
Top companies by EBITDA margin, %
| Top | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Larsen & Toubro ($LTOD) | 13.1% | 12.8% | 10.5% | 10.3% | |
| Nexus Infrastructure Plc ($NEXS) | 6.8% | 7.1% | 8.6% | 7.9% | |
| Hindustan Construction Co ($HIN) | 8.9% | 12.0% | 13.5% | 7.9% | 7.7% |
| |
|---|
| Median (3 companies) | 8.9% | 12.0% | 10.5% | 7.9% | 7.7% |
|---|
| Electrosteel Castings ($ECS) | 15.0% | 12.8% | 12.3% | 13.9% | 11.9% |
Top companies by CAPEX/Revenue, %
| Top | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Nexus Infrastructure Plc ($NEXS) | 2.1% | 0.4% | 0.8% | 3.0% | |
| Larsen & Toubro ($LTOD) | 8.2% | 7.0% | 4.3% | 2.8% | |
| Hindustan Construction Co ($HIN) | 13.4% | 9.2% | 1.1% | 2.5% | 0.0% |
| |
|---|
| Median (3 companies) | 8.2% | 7.0% | 1.1% | 2.8% | 0.0% |
|---|
| Electrosteel Castings ($ECS) | 6.9% | 5.8% | 1.7% | 1.5% | 1.4% |
Top companies by ROIC, %
| Top | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Nexus Infrastructure Plc ($NEXS) | | 49.5% | 45.3% | 32.5% | |
| Hindustan Construction Co ($HIN) | 4.8% | 7.4% | 8.9% | 8.2% | 11.7% |
| Larsen & Toubro ($LTOD) | 8.6% | 6.8% | 6.3% | 6.1% | |
| |
|---|
| Median (3 companies) | 6.7% | 7.4% | 8.9% | 8.2% | 11.7% |
|---|
| Electrosteel Castings ($ECS) | 6.3% | 5.0% | 4.6% | 4.6% | 4.5% |
Top companies by Net Debt / EBITDA
| Top | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Hindustan Construction Co ($HIN) | 12.3x | 9.3x | 6.4x | 8.5x | 4.9x |
| Larsen & Toubro ($LTOD) | 6.9x | 7.4x | 7.9x | 8.0x | |
| Nexus Infrastructure Plc ($NEXS) | -2.4x | -2.9x | -1.9x | -1.6x | |
| |
|---|
| Median (3 companies) | 6.9x | 7.4x | 6.4x | 8.0x | 4.9x |
|---|
| Electrosteel Castings ($ECS) | 6.9x | 8.0x | 6.9x | 5.2x | 4.6x |
