Exide Industries - 3QFY2014 results - Views of Mr. Yaresh Kothari - Research Analyst – Auto & Auto Ancillary, Angel Broking

Exide Industries 3QFY2014 Result Review (CMP: Rs. 107/ TP: NA/ Recommendation: Neutral)

"Exide Industries' (EXID) 3QFY2014 results significantly missed our as well as consensus estimates on the top-line and bottom-line front. The company posted disappointing results led by sharp decline in the top-line amid slowdown in the automotive and the industrial battery segments and also due to higher competition. The top-line declined by 10.9% yoy (8.9% qoq) to Rs. 1,304cr, lower than our expectations of Rs. 1,500cr, largely due to the slowdown in the automobile and industrial battery segments. While in the automotive space, demand in the OEM as well as replacement battery segments remained subdued, within the industrial battery space, demand continues to remain sluggish in the inverter, telecom and infrastructure battery segments. EBITDA margins deteriorated to 10.9% (down 312bp qoq), lower than our expectations of 14.5%, primarily on account of the decline in the top-line. While raw-material cost as a percentage of sales remained stable sequentially, other expenditure as a percentage of sales jumped sharply by 260bp during the quarter. Consequently, operating profit declined 13.4% yoy (29.2% qoq) to Rs. 143cr. Led by a weak operating performance, net profit declined 25.5% yoy (34.7% qoq) to Rs. 78cr, lower than our estimates of Rs. 134cr. We would definitely revise our estimates downwards post the disappointing 3QFY2014 results, however, we would like to seek more clarity from the management on the volume performance during the quarter. We recommend a Neutral rating on the stock."

Source : Equity Bulls

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