Steel Authority Of India reports 6,810% EBITDA growth in 2018 and 29.5% Revenue growth
30 May 2018 • About Steel Authority Of India (
$SAUD) • By InTwits
Steel Authority Of India reported FY2018 financial results today. Overall the company's long term financial model is characterised by the following facts:
- EBITDA Margin is quite volatile: 8.1% in FY2018, 0.2% in FY2017, -7.5% in FY2016, 10.6% in FY2015, 9.0% in FY2014
- Steel Authority Of India has high CAPEX intensity: 5 year average CAPEX/Revenue was 15.5%. At the same time it's a lot of higher than industry average of 8.8%.
- CAPEX is quite volatile: 12,883 KRWm in 2018, 21,410 KRWm in 2017, 48,029 KRWm in 2016, 16,414 KRWm in 2015, 10,317 KRWm in 2014
- The company has potentially unprofitable business model: ROIC is 2.1%
- It operates with high leverage: Net Debt/EBITDA is 9.0x while industry average is 6.4x
Below you can find a comprehensive analysis of the key data driving the company's performance and the stock price.
Revenue and profitability
Steel Authority Of India's Revenue surged on 29.5%. During FY2014-FY2018 Revenue growth bottomed in FY2016 at -15.4% 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 5.8 pp from -6.3% to -0.49% in FY2018. During FY2014-FY2018 Net Income margin bottomed in FY2016 at -10.8% and was growing since that time.
Investments (CAPEX, working capital and M&A)
In FY2018 Steel Authority Of India had CAPEX/Revenue of 11.9%. Steel Authority Of India showed decline in CAPEX/Revenue of 5.0 pp from 16.9% in FY2015 to 11.9% in FY2018. For the last three years the average CAPEX/Revenue was 13.8%. To fuel its fast growth Steel Authority Of India made large investments to CAPEX (146% of EBITDA). CAPEX as a % of Revenue stuck to a declining trend at -1.9 pp per annum in FY2014-FY2018.
Return on investment
The company operates at low but positive ROIC (2.1%) and negative ROE (-0.8%). ROIC increased on 5.8 pp from -3.6% to 2.1% in FY2018. ROE increased on 6.4 pp from -7.1% to -0.76% in FY2018. During FY2014-FY2018 ROE bottomed in FY2016 at -10.0% and was growing since that time.
Leverage (Debt)
Company's Net Debt / EBITDA is 9.0x and Debt / EBITDA is 9.1x. Net Debt / EBITDA dropped on 567.7x from 576.7x to 9.0x in FY2018. Debt increased on 8.0% while cash dropped on 18.9%.
Steel Authority Of India has short term refinancing risk: cash is only 1.4% of short term debt.
Financial and operational results
FY ended 31 Mar 2018
Steel Authority Of India ($SAUD) key annual financial indicators| mln. INR | 2014 | 2015 | 2016 | 2017 | 2018 | 2018/2017 |
|---|
P&L
|
|---|
| Revenue | 464,677 | 455,908 | 385,506 | 439,467 | 569,184 | 29.5% |
| EBITDA | 41,787 | 48,343 | -29,025 | 671 | 46,356 | 6,809.5% |
| Net Income | 26,521 | 20,353 | -41,765 | -27,562 | -2,814 | |
Balance Sheet
|
|---|
| Cash | 4,473 | 5,193 | 1,805 | 2,110 | 1,710 | -18.9% |
| Short Term Debt | 118,875 | 164,311 | 155,749 | 198,130 | 122,443 | -38.2% |
| Long Term Debt | 141,330 | 157,152 | 174,957 | 190,875 | 297,772 | 56.0% |
Cash flow
|
|---|
| Capex | 89,563 | 77,043 | 66,520 | 54,543 | 67,576 | 23.9% |
Ratios
|
|---|
| Revenue growth | 4.5% | -1.9% | -15.4% | 14.0% | 29.5% | |
| EBITDA growth | -16.0% | 15.7% | -160.0% | -102.3% | 6,809.5% | |
|
|---|
| EBITDA Margin | 9.0% | 10.6% | -7.5% | 0.2% | 8.1% | 8.0% |
| Net Income Margin | 5.7% | 4.5% | -10.8% | -6.3% | -0.5% | 5.8% |
| CAPEX, % of revenue | 19.3% | 16.9% | 17.3% | 12.4% | 11.9% | -0.5% |
|
|---|
| ROIC | 3.6% | 3.9% | -7.1% | -3.6% | 2.1% | 5.8% |
| ROE | 6.2% | 4.7% | -10.0% | -7.1% | -0.8% | 6.4% |
| Net Debt/EBITDA | 6.1x | 6.5x | | 576.7x | 9.0x | -567.7x |
Peers in Iron & Steel/Interm.Products
Below you can find Steel Authority Of India benchmarking vs. other companies in Iron & Steel/Interm.Products 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 |
|---|
| Tata Steel ($TTST) | | -6.1% | -23.6% | 10.4% | 12.9% |
| |
|---|
| Median (1 company) | | -6.1% | -23.6% | 10.4% | 12.9% |
|---|
| Steel Authority Of India ($SAUD) | | -1.9% | -15.4% | 14.0% | 29.5% |
Top companies by EBITDA margin, %
| Top | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Tata Steel ($TTST) | 11.1% | 9.1% | 7.6% | 14.6% | 16.6% |
| |
|---|
| Median (1 company) | 11.1% | 9.1% | 7.6% | 14.6% | 16.6% |
|---|
| Steel Authority Of India ($SAUD) | 9.0% | 10.6% | -7.5% | 0.2% | 8.1% |
Top companies by CAPEX/Revenue, %
| Top | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Tata Steel ($TTST) | 11.1% | 9.8% | 9.6% | 6.6% | 5.7% |
| |
|---|
| Median (1 company) | 11.1% | 9.8% | 9.6% | 6.6% | 5.7% |
|---|
| Steel Authority Of India ($SAUD) | 19.3% | 16.9% | 17.3% | 12.4% | 11.9% |
Top companies by ROIC, %
| Top | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Tata Steel ($TTST) | 8.9% | 5.4% | 2.1% | 8.4% | 10.7% |
| |
|---|
| Median (1 company) | 8.9% | 5.4% | 2.1% | 8.4% | 10.7% |
|---|
| Steel Authority Of India ($SAUD) | 3.6% | 3.9% | -7.1% | -3.6% | 2.1% |
Top companies by Net Debt / EBITDA
| Top | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Tata Steel ($TTST) | 4.4x | 5.7x | 9.4x | 4.6x | 3.8x |
| |
|---|
| Median (1 company) | 4.4x | 5.7x | 9.4x | 4.6x | 3.8x |
|---|
| Steel Authority Of India ($SAUD) | 6.1x | 6.5x | | 576.7x | 9.0x |
