Exide Industries - Revenue growth likely to slow down - Kotak

Exide's revenue growth is likely to slow down due to flattish growth in inverter battery volumes and slowdown in OEM volumes. We expect EBITDA margin to improve due to better replacement/OEM mix and decline in lead prices. We are cautious on the stock due to expensive valuations and slowdown in revenue growth. We increase our target price to Rs120 (from Rs110 earlier) on rollover to June 2014.

We maintain SELL on expensive valuations and low revenue growth

We maintain our SELL rating on the stock due to expensive valuations (16X PE on FY2015E earnings estimates) and lower revenue growth. We have kept our earnings estimates almost unchanged as lower revenue growth gets offset by increase in our EBITDA margin assumptions on lower lead prices and improvement in product mix. Our target price has been increased to Rs120 (from Rs110 earlier) on rollover to June 2014 earnings (versus March 2014 earlier). We now value Exide's 100% stake in ING Vysya insurance subsidiary at Rs13/share (based on valuation ascribed by Exide to buy out 50% stake in ING Vysya insurance).

Source : Equity Bulls

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