2026-05-14 17:50:24
SKF India Ltd recommends final dividend of Rs. 40
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Exide Industries - 2QFY2013 Result Update - Angel Broking
Posted On : 2012-10-23 22:14:51( TIMEZONE : IST )
For 2QFY2013, Exide Industries (EXID) reported an extremely weak set of results on the bottom-line front (down 20.9% qoq) which was significantly below our estimates led by a sharp deterioration in the operating margins. The EBITDA margins were impacted on account of increase in cost pressures led by rising lead prices, employee expenses, power cost and advertising expenses. We have raised our top-line estimates for FY2013E/14E to factor in the strong volume momentum in the automotive replacement segment. Nonetheless, our earnings estimates are revised downwards to account for the cost pressures and increasing competitive activity in the segment which has led to reduced pricing power. We maintain our Neutral rating on the stock.
Margin pressures impact 2QFY2013 performance: For 2QFY2013, EXID's top-line surprised positively, registering a robust growth of 29.7% yoy (down 2.1% qoq) to Rs.1,521cr, driven by a strong growth in the automotive replacement and inverter battery segments. The EBITDA margin contracted 261bp sequentially to 12.4% due to increase in raw-material expenses (led by INR depreciation) and higher other expenditure (due to higher power and fuel expenses). As a result, the net profit declined 20.9% qoq to Rs.120cr against our estimate of Rs.134cr. The management indicated that the replacement to original equipment manufacturer (OEM) mix improved on a sequential basis as growth in the OEM segment declined during the quarter.
Outlook and valuation: We expect the company to report an improvement in its operating performance in 2HFY2013 led by a pick-up in demand from the OEM segment and sustained growth in the automotive replacement segment. Further, EXID has hiked battery prices by 5% across the replacement segment which will benefit the operating margins. Nonetheless, current valuations of 16.6x FY2014E earnings, capture most of the positives in our view. We therefore maintain our Neutral rating on the stock.
