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UBS Investment Research
Exide Industries
Q 2 Big Miss, Expect Better H2 FY12
Event: 2QFY12 results – a big miss
Exide Industries’ 2QFY11 PAT came in at Rs512mn (-71% YoY) with EBITDA
margin of 7.7% (down 1410bps), sharply below estimates due to: 1) muted growth
on weak demand across segments—auto OE (+6%), auto aftermarket (-6%) and
industrial (-5%); 2) MTM loss of Rs400-500mn on lead inventory; 3) forex loss of
Rs 150mn on account of rupee depreciation; 4) higher other expenses of Rs200mn
due to one-off special promotional activity and dealer conference; 5) lower other
income of Rs 100mn (lower dividends income).
Impact: reduce estimates and lower price target to Rs172
We cut our FY12/13 EPS estimates by 21%/15% to incorporate the weak demand
trends and lower margins. However, we expect 2H to be better as the company
realises the benefits of falling lead prices and sees recovery in aftermarket
volumes, aided by regaining some market share.
Action: Maintain positive view on Exide, big 2W opportunity ahead
We retain our positive view that Exide remains well-placed to benefit from
emerging 2-wheeler push start battery aftermarket, given its strong market position
and distribution. We expect this to reflect in FY13 numbers and forecast FY11-13
earnings CAGR of 15% and estimate FY13 core ROCE of 70%.
Valuation: Maintain Buy with a lowered PT of Rs 172
We derive our lowered price target of Rs172 from a SOTP methodology based on
16x FY13E PE for Exide’s battery business, to which we add value (Rs14/share)
for its stakes in subsidiaries and insurance business.
Exide Industries
Exide Industries is India’s largest lead acid battery manufacturer and it
dominates the storage battery market in the automotive OEM and replacement
segments. The company is involved in the manufacture of automotive, industrial
and submarine batteries for automotive and industrial (power, telecom and
railways infrastructure) applications. The company sells its products under wellestablished
brands including EXIDE, SONIC, SF, INDEX and Standard
Furukawa.
Statement of Risk
We believe the key risks facing the company include volatility in the prices of
lead, competitive pressure in domestic market, slowdown in auto and
infrastructure sector; and forex volatility.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
UBS Investment Research
Exide Industries
Q 2 Big Miss, Expect Better H2 FY12
Event: 2QFY12 results – a big miss
Exide Industries’ 2QFY11 PAT came in at Rs512mn (-71% YoY) with EBITDA
margin of 7.7% (down 1410bps), sharply below estimates due to: 1) muted growth
on weak demand across segments—auto OE (+6%), auto aftermarket (-6%) and
industrial (-5%); 2) MTM loss of Rs400-500mn on lead inventory; 3) forex loss of
Rs 150mn on account of rupee depreciation; 4) higher other expenses of Rs200mn
due to one-off special promotional activity and dealer conference; 5) lower other
income of Rs 100mn (lower dividends income).
Impact: reduce estimates and lower price target to Rs172
We cut our FY12/13 EPS estimates by 21%/15% to incorporate the weak demand
trends and lower margins. However, we expect 2H to be better as the company
realises the benefits of falling lead prices and sees recovery in aftermarket
volumes, aided by regaining some market share.
Action: Maintain positive view on Exide, big 2W opportunity ahead
We retain our positive view that Exide remains well-placed to benefit from
emerging 2-wheeler push start battery aftermarket, given its strong market position
and distribution. We expect this to reflect in FY13 numbers and forecast FY11-13
earnings CAGR of 15% and estimate FY13 core ROCE of 70%.
Valuation: Maintain Buy with a lowered PT of Rs 172
We derive our lowered price target of Rs172 from a SOTP methodology based on
16x FY13E PE for Exide’s battery business, to which we add value (Rs14/share)
for its stakes in subsidiaries and insurance business.
Exide Industries
Exide Industries is India’s largest lead acid battery manufacturer and it
dominates the storage battery market in the automotive OEM and replacement
segments. The company is involved in the manufacture of automotive, industrial
and submarine batteries for automotive and industrial (power, telecom and
railways infrastructure) applications. The company sells its products under wellestablished
brands including EXIDE, SONIC, SF, INDEX and Standard
Furukawa.
Statement of Risk
We believe the key risks facing the company include volatility in the prices of
lead, competitive pressure in domestic market, slowdown in auto and
infrastructure sector; and forex volatility.
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