Mahindra & Mahindra EBITDA jumped on 273% and Revenue jumped on 10.7%

29 May 2018 • About Mahindra & Mahindra ($MHID) • By InTwits

Mahindra & Mahindra reported FY2018 financial results today. Here are the key drivers of the company's long term financial model:

EBITDA Margin is quite volatile: 16.2% in FY2018, 4.8% in FY2017, 4.9% in FY2016, 4.7% in FY2015, 7.5% in FY2014
Mahindra & Mahindra has medium CAPEX intensity: 5 year average CAPEX/Revenue was 6.6%. At the same time it's in pair with industry average of 7.2%
CAPEX is quite volatile: ₹28,772m in FY2018, ₹29,771m in FY2017, ₹43,216m in FY2016, ₹62,525m in FY2015, ₹69,673m in FY2014
The company has business model with average profitability: ROIC is 11.8%
It operates with medium-size leverage: Net Debt/EBITDA is 2.9x while industry average is 2.9x

Below you can find a comprehensive analysis of the key data driving the company's performance and the stock price.

Revenue and profitability

The company's Revenue surged on 10.7%. During the last 5 years Revenue growth bottomed in FY2015 at -5.3% 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 4.2 pp from 5.0% to 9.2% in FY2018. During the last 5 years Net Income margin bottomed in FY2016 at 4.7% and was growing since that time.

Investments (CAPEX, working capital and M&A)

In FY2018 Mahindra & Mahindra had CAPEX/Revenue of 7.2%. CAPEX/Revenue showed almost no change from FY2015 to FY2018. Average CAPEX/Revenue for the last three years was 6.7%.

Return on investment

The company operates at good ROE (22.6%) while ROIC is low (11.8%). ROIC surged on 10.9 pp from 0.85% to 11.8% in FY2018. ROE increased on 9.4 pp from 13.2% to 22.6% in FY2018. During the last 5 years ROIC bottomed in FY2017 at 0.85%. During the last 5 years ROE bottomed in FY2016 at 12.0% and was growing since that time.

Leverage (Debt)

Company's Net Debt / EBITDA is 2.9x and Debt / EBITDA is 3.4x. Net Debt / EBITDA dropped on 7.1x from 10.1x to 2.9x in FY2018. Debt surged on 12.1% while cash jumped on 40.2%.

Mahindra & Mahindra has short term refinancing risk: cash is only 56.9% of short term debt.

Financial and operational results

FY ended 31 Mar 2018

Mahindra & Mahindra ($MHID) key annual financial indicators

mln. INR	2014	2015	2016	2017	2018	2018/2017
P&L
Revenue	669,310	633,620	673,518	739,998	818,821	10.7%
EBITDA	50,112	29,567	32,865	35,437	132,261	273.2%
Net Income	46,669	31,375	31,484	36,980	75,104	103.1%
Balance Sheet
Cash	46,438	30,046	44,793	45,976	64,480	40.2%
Short Term Debt	99,167	159,486	70,771	101,217	113,255	11.9%
Long Term Debt	254,918	223,270	235,988	301,245	338,092	12.2%
Cash flow
Capex	36,653	47,589	41,720	50,262	59,058	17.5%
Ratios
Revenue growth	6.8%	-5.3%	6.3%	9.9%	10.7%
EBITDA growth	-2.6%	-41.0%	11.2%	7.8%	273.2%

EBITDA Margin	7.5%	4.7%	4.9%	4.8%	16.2%	11.4%
Net Income Margin	7.0%	5.0%	4.7%	5.0%	9.2%	4.2%
CAPEX, % of revenue	5.5%	7.5%	6.2%	6.8%	7.2%	0.4%

ROIC	4.7%	1.2%	1.2%	0.8%	11.8%	10.9%
ROE	21.6%	12.8%	12.0%	13.2%	22.6%	9.4%
Net Debt/EBITDA	6.1x	11.9x	8.0x	10.1x	2.9x	-7.1x

Peers in Cars & Utility Vehicles

Below you can find Mahindra & Mahindra benchmarking vs. other companies in Cars & Utility Vehicles 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.

Mahindra & Mahindra stock price chart

Mahindra & Mahindra financials

mln.	FY2010	FY2011	FY2012

Revenue	231,987	334,463	547,059
EBITDA	-24,612.700	40,815	45,539
Net income	24,786	30,797	31,267
CAPEX	27,029	26,526	33,370
Debt	134,859	170,475	231,205
Cash	26,943	18,084	31,648

About Mahindra & Mahindra

Mahindra & Mahindra Limited primarily engages in the automotive and farm equipment businesses in India and internationally. The company offers aerospace components, assemblies, and aircrafts; automotive services and pre-owned cars; and crop care, fresh produce services, seed distribution, and seed potato inputs. It also provides commercial vehicles, such as Alfa, Gio, trucks and buses, Bolero Pick-Up, Genio, Loadking, Maxximo Plus, and Tourister buses; personal vehicles, including Bolero, e2o, Scorpio, Thar, Verito, Xylo, Actyon, Actyon Sports, Chairman W, Korando, Kyron, Rexton, Rodius, XUV 500, and Quanto; contract sourcing and engineering services; and components, such as alloy steel, blankings, castings, composites, ferrites and magnetic products, forgings, gears, ring rolling, and stampings. In addition, the company offers backhoe loaders; engineering consulting, information security consulting, project management, and strategic risk management services; defense vehicles, including Land, Axe, Marksman, Mine Protected Vehicle, and Rakshak; diesel generators, inverters, and off-grid solar energy solutions; on-grid, power-leasing, telecom infrastructure management, and turnkey EPC services; tractors, crop harvesting, and rice and sugarcane farming solutions; and general and life insurance broking, as well as vehicle, asset, and rural housing finance services. Further, it provides bulk handling systems; business process outsourcing, IT consulting, R&D engineering and manufacturing, supply chain consulting, infrastructure management, security, and network technology solutions and services; leisure boats, resorts, homestays, and terra camps; logistics and people transport solutions; business cities and special economic zones, and living spaces; baby and maternity products through its Mom & Me retail chain; and two wheelers, such as Centuro, Pantero, Duro-DZ, Flyte, genZe, Kine, and Rodeo-RZ. The company was founded in 1945 and is headquartered in Mumbai, India.