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Research
Exide Industries - 1QFY2013 Result Update - Angel Broking
Posted On : 2012-07-21 23:07:28( TIMEZONE : IST )
Exide Industries (EXID) reported better-than-expected results for 1QFY2013, driven by strong volume growth in the two-wheeler (+28% yoy) and industrial battery (+19% yoy) segments. EBITDA margin however, remained suppressed led by higher input costs and other expenditure. We have raised our top-line estimates slightly for FY2013E/14E as we believe the anticipated improvement in auto OEM sales and pick-up in the auto replacement battery segment will benefit the company. We maintain our Accumulate rating on the stock.
Better-than-expected operating performance: For 1QFY2013, EXID's top-line surprised positively, registering robust 24.5% yoy (7.3% qoq) growth to Rs.1,554cr, driven by strong growth in the two-wheeler (+28% yoy) and industrial battery volumes (+19% yoy). Growth in the industrial battery segment was led by growth in inverter and UPS batteries. Four-wheeler battery volumes continued to remain subdued and grew 10% yoy aided by demand pick-up in the replacement segment. EBITDA margin slipped by 285bp yoy to 15% owing to raw-material cost increases (+140bp yoy) and higher other expenditure (+170bp yoy). While the lead prices declined 22% yoy (6% qoq), INR depreciation against the USD (~21% yoy and ~8% qoq) negated most of the resulting advantages. Other expenditure increased primarily led by foreign exchange loss of Rs.10cr. As a result, net profit declined by 6.9% yoy to Rs.152cr.
Outlook and valuation: We expect EXID to report improvement in its performance in FY2013E led by likely revival in demand in the four-wheeler OEM as well as replacement batteries and decline in lead prices. Nonetheless, current valuations of 14.5x FY2014E earnings, captures most of the positives in our view. We therefore maintain our Accumulate rating on the stock with a target price of Rs.149. We value EXID's core operations in-line with its historical average of 15x its FY2014E EPS at Rs.137/share. We value its stake in ING Vysya Life Insurance at Rs.12/share on FY2014E NBAP.
