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4QFY11 results
Exide reported better than expected operating results for 4QFY11 with
revenues up 19% YoY (+17% QoQ) and Ebitda -3% YoY (+33% QoQ)
and margins recovering 210bps QoQ. Bottom line performance was
boosted by a one-off gain from prepayment of a long term loan. Both auto
and industrial businesses saw sequential improvements. Whilst
performance should continue to improve, we anticipate that the 20%
margin guidance remains a stretch. We raise FY12-13 estimates by 8-9%
to reflect higher volumes. Price target raised to Rs161, 7% upside. O-PF.
4QFY11: better than expected
Financial performance was healthy in 4QFY11 following a weak 3QFY11. Sales
increased 19% YoY and 17% QoQ – the first increase after two consecutive QoQ
declines. Ebitda declined 3% YoY as gross margins drove an 380bps Ebitda margin
decline. However, QoQ margin performance was strong with gross margins up
105bps and Ebitda margins 210bps. The results were boosted by high other
income (Rs436m, +663% YoY, +27% QoQ) from dividends and a one-off gain
from prepayment of a loan of Rs220m. PAT grew 22% YoY/32% QoQ to Rs1.64bn.
Volume growth healthy
Capacity ramp up in auto supported healthy volume growth (16-17% in 4w and
22-23% in 2w), accompanied by a ~5% price hike in replacement in February.
Easing capacity constraints helped the Replacement:OE mix recover to 1.2-25:1
from 1.17:1 in 3Q. Going forward, this should improve further as capacity
constraints ease by 2Q. Industrial volume growth was 14% and inverters grew at
a similar pace despite a late start to the summer. Margins improved as pricing in
telecom as well as other B2B segments improved. Demand remained soft though.
Capacity expansion continues, balance sheet healthy
The company has invested Rs2.75bn of its planned Rs4.25bn of capex for FY11.
FY12 capex is expected to be ~Rs3.7bn, including Rs1.5bn carried over from
FY11. The capex for FY12 is primarily in the 4w auto segment. Losses in ING
Vysya Life declined 49% during the year to Rs350m. Exide invested Rs1.18bn into
the business. FY12 investment is expected to be significantly lower. The balance
sheet remains healthy with liquid investments of ~Rs5bn and negligible debt.
Upgrade earnings to reflect volume strength
FY12 margin performance will hinge on volume performance in auto and pricing in
the industrial business. While we are sanguine about the auto business, we
believe that margins in industrial will remain a challenge. Our margin assumptions
for FY12 remain below company guidance of ~20%, although we have upgraded
our revenue and Ebitda estimates by 5-6% and net profit estimates by 8-9% for
FY12-13. We roll forward our price target to FY13 (15xPE). We remove the
valuation for smelters from our SOTP as the income is now captured at the parent
level through dividend payouts. Raise price target to Rs161, 7% upside. O-PF.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
4QFY11 results
Exide reported better than expected operating results for 4QFY11 with
revenues up 19% YoY (+17% QoQ) and Ebitda -3% YoY (+33% QoQ)
and margins recovering 210bps QoQ. Bottom line performance was
boosted by a one-off gain from prepayment of a long term loan. Both auto
and industrial businesses saw sequential improvements. Whilst
performance should continue to improve, we anticipate that the 20%
margin guidance remains a stretch. We raise FY12-13 estimates by 8-9%
to reflect higher volumes. Price target raised to Rs161, 7% upside. O-PF.
4QFY11: better than expected
Financial performance was healthy in 4QFY11 following a weak 3QFY11. Sales
increased 19% YoY and 17% QoQ – the first increase after two consecutive QoQ
declines. Ebitda declined 3% YoY as gross margins drove an 380bps Ebitda margin
decline. However, QoQ margin performance was strong with gross margins up
105bps and Ebitda margins 210bps. The results were boosted by high other
income (Rs436m, +663% YoY, +27% QoQ) from dividends and a one-off gain
from prepayment of a loan of Rs220m. PAT grew 22% YoY/32% QoQ to Rs1.64bn.
Volume growth healthy
Capacity ramp up in auto supported healthy volume growth (16-17% in 4w and
22-23% in 2w), accompanied by a ~5% price hike in replacement in February.
Easing capacity constraints helped the Replacement:OE mix recover to 1.2-25:1
from 1.17:1 in 3Q. Going forward, this should improve further as capacity
constraints ease by 2Q. Industrial volume growth was 14% and inverters grew at
a similar pace despite a late start to the summer. Margins improved as pricing in
telecom as well as other B2B segments improved. Demand remained soft though.
Capacity expansion continues, balance sheet healthy
The company has invested Rs2.75bn of its planned Rs4.25bn of capex for FY11.
FY12 capex is expected to be ~Rs3.7bn, including Rs1.5bn carried over from
FY11. The capex for FY12 is primarily in the 4w auto segment. Losses in ING
Vysya Life declined 49% during the year to Rs350m. Exide invested Rs1.18bn into
the business. FY12 investment is expected to be significantly lower. The balance
sheet remains healthy with liquid investments of ~Rs5bn and negligible debt.
Upgrade earnings to reflect volume strength
FY12 margin performance will hinge on volume performance in auto and pricing in
the industrial business. While we are sanguine about the auto business, we
believe that margins in industrial will remain a challenge. Our margin assumptions
for FY12 remain below company guidance of ~20%, although we have upgraded
our revenue and Ebitda estimates by 5-6% and net profit estimates by 8-9% for
FY12-13. We roll forward our price target to FY13 (15xPE). We remove the
valuation for smelters from our SOTP as the income is now captured at the parent
level through dividend payouts. Raise price target to Rs161, 7% upside. O-PF.
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