Exide Industries - Q1FY2014 Result Review - Angel Broking

Exide Industries (EXID) reported better-than-expected 1QFY2014 performance driven by sharp expansion in operating margins led by continued growth in the automotive replacement battery segment and also due to ~10% qoq decline in lead prices. For 1QFY2014, top-line grew broadly in-line with our estimates and stood at Rs. 1,627cr (up 4.8% yoy and 5.6% qoq) led by continued traction in the automotive replacement battery segment. However, subdued OEM demand from the two and four wheeler manufacturers impacted the overall top-line growth. The growth in the industrial and home UPS battery segments too remained sluggish during the quarter. On the operating front, EBITDA margins improved by 116bp yoy (287bp qoq) to 16.1%, which was significantly ahead of our estimates of 13.6%. This was primarily on account of ~10% qoq decline in lead prices which resulted in a 80bp yoy (277bp qoq) savings on the raw-material front.

Additionally, strong performance by the higher margin automotive replacement segment too attributed to the strong margin performance. Led by a strong operating performance, net profit posted a better-than-expected growth of 4.6% yoy (8.6% qoq) to Rs. 159cr. At Rs. 122, the stock is trading at 13.5x FY2015 earnings. We shall revise our estimates and release a detailed result note post our interaction with the management during the earnings conference call. Until then, we maintain our Buy rating on the stock with a target price of Rs. 141.

Source : Equity Bulls

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