Exide Industries (EXID.BO, Buy, PT Rs 200, 34% upside)UBS: India Mid-Caps TOP PICKS - September 2011

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• Lead acid storage battery manufacturer in India - auto and
industrial battery market share of 72% and 45%. Duopoly
market
• Consumer business characteristics - >80% of earnings from
the auto aftermarket and home inverter - segments where
branding and distribution are critical
• Strong FY11-13E earnings CAGR of 25%, attractive FY12E
core ROCE/ROE of 75%/44%, net cash B/S
• Drivers - Back-to-trend aftermarket:OEM mix (1.6x), strong
outlook for replacement demand and power backup segment
• Negligible earnings sensitivity to lower FY12-13E OEM auto
sales
• Recycle lead from captive smelters – cost advantage
• Market Cap US$3bn, ADV ~US$6mn; Shareholding: promoters
– 46%
• Valuation: SOTP – FY13E PE of 16x for core battery business



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