Exide Industries - Q3FY14 Results - Indsec Securities and Finance Ltd

Exide Industries reported disappointing results in Q3FY14 as revenue stood lower 10.9% YoY and 8.9% QoQ at Rs.13bn. This was primarily due volume de-growth across key segments.

Despite lower RM cost (as % of sales, -214bps YoY), company posted an EBITDA of Rs.1.4bn, a decrease of 13.4% YoY and 29.2% QoQ. This was on back of higher other expenses (as % of sales, +142bps YoY, +259bps QoQ—due to higher advertising expenses) and higher employee expenses (+103 bps YoY, +91bps QoQ). Also lower operating leverage has resulted in OPM contracting 31bps YoY and significantly lower by 312 bps QoQ to 10.9%.

Lower operating profit along with higher depreciation and lower other income (lower dividend income due to lower mutual fund investment) led to PAT decline of 25.5% YoY and 34.7% QoQ to Rs.0.78bn. EPS for the qtr stood at Rs. 0.91 as compared to Rs. 1.2 in the corresponding period last year.

At CMP of Rs.102, the stock is currently trading at 14.6xFY14E and 12.4xFY15E. Management does not expect the situation in the automotive segment to improve in the near term. The performance of the inverter segment is not likely to pick up going ahead. However, the recent price correction post the results captures most of the negatives. Also the value accruing from the insurance business investment would limit significant downsides in the stock. We hold a neutral view on the stock.

Source : Equity Bulls

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