Exide Industries - Nirmal Bang Institutional

- Exide Industries' (EIL) 1QFY14 earnings at Rs1.6bn were slightly better than our estimate of Rs1.5bn, with the variance being largely on account of better than- expected expansion in margins.

- Low-priced lead inventory and product price hikes helped EIL to report a strong 286bps QoQ expansion in margins at 16.1% versus our estimate of 14.4%.

- Net sales grew by just 5% YoY at Rs16.3bn and were in line with our estimate of Rs16.5bn.

- We believe the 286bps QoQ expansion in margins during the quarter is a strong positive for EIL, as it came at a time when the demand for its high-margin inverters was depressed due to early arrival of the monsoon.

- We have retained our Buy rating on the stock with a target price of Rs165 (14.5x FY15E earnings). We have also retained our estimates for FY14/FY15 but will revise them, if needed, after the conference call on 17 July 2013 to discuss 1QFY14 performance.

Source : Equity Bulls

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