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Research
Exide Industries - Positives priced in - Prabhudas Lilladher
Posted On : 2012-07-21 23:05:53( TIMEZONE : IST )
Top-line stems a positive surprise; bottom-line in line with estimates: Top-line growth surprised positively with 24.8% YoY increase to Rs15.5bn (PLe: Rs14.5bn) mainly on account of 19.0% YoY growth in the industrial segment volumes and a 10.0% YoY improvement in the automotive volumes. On a sequential basis, raw material cost/sales declined by 210bps on account of lower lead prices and richer product mix in favour of replacement segment. However, other expenses increased by 170bps YoY to 14.5% of net sales on account of higher advertising spend as well as forex loss of Rs103m. As a result, EBITDA margins improved by 30bps QoQ @15.0% and EBITDA grew by 4.7% YoY to Rs2.3bn (PLe: Rs2.2bn). Adjusted for the same, EBITDA margin stood at 15.6%, an improvement of 130bps QoQ. Other income declined by 52.1% YoY on account of no dividend income from subsidiaries against Rs229m in the corresponding period last year. As a result, PAT declined by 6.9% YoY to Rs1.52bn in line with our estimates
- Industrial segment volumes grew by 19% YoY: Despite de-growth in the Telecom segment, the overall volume growth in the industrial segment stood at 19.0% YoY due to increased demand for inverter and VRLA batteries. Industrial segment volumes grew by 19% YoY to 503m AmPH (Q4FY12 volumes @482m AmPH).
Outlook: In our view, automotive four-wheeler segment is likely to grow by 10-12% in FY13E. Whereas, on the industrial segment front, the growth is likely to be 14-15%. Inverter as well as UPS segment demand continues to be strong, with both the segments likely to register a growth of 15%+ in FY13E. Management has guided an improvement in EBITDA margins to 16-17% for FY13E.
Positives priced in; Maintain 'Reduce': Adjusting for Exide's 50% stake in ING Life Insurance (valued at Rs10/share), the stock is trading at 16.8x FY13E and 14.5x FY14E earnings, respectively. The current valuation, in our view, captures majority of positive, thereby, providing limited upside from the current levels. Hence, we maintain our 'Reduce' call on the stock with a target price of Rs141, based on 15x FY14E EPS.
