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A n t i c i p a t e d m a r g i n c h e e r d e l a y e d t i l l H 2 F Y 1 2 E …
Exide Industries (EIL) posted Q1FY12 results that were below our
estimates with net sales at | 1243.6 crore (I-direct estimate: | 1343.9
crore). Revenues moved up marginally (1.4% QoQ) from | 1226 crore in
Q4FY11 (adjusted for one-time rebate received of | 20 crore) to | 1243.6
crore. The lacklustre revenue performance can be attributed to lower
OEM demand (only ~8% growth YoY) and dwindling inverter battery
sales. The EBITDA margins contracted (down 490 bps YoY and 110 bps
QoQ) due to higher RM costs (up 75 bps QoQ). The higher lead prices (up
~21% YoY) and subdued pricing in key segments resulted in inability to
have complete pass on. The PAT was boosted by strong recurring
dividend income of | 30.8 crore arising from subsidiaries (~| 20 crore)
and mutual fund investments (~| 9 crore). The PAT margin came in at
13.1% (flattish QoQ) at | 163.2 crore (I-direct estimate: | 184.5 crore).
ƒ Highlights of the quarter
EIL’s Q1FY12 results were highlighted by slower replacement offtake from
dealers and higher lead prices. The expected increase in sales to trade
offtake (1.2:1) was subdued QoQ. This was primarily as dealer’s
confidence in the aftermarket segment, which had been lost last year (~8-
10% market share loss in FY11), could not be completely taken back. EIL
continues to augment its capacities and is on track to touch ~3.3 crore
units in Q4FY12E. The industrial segment (down ~26% YoY) continued to
witness lower offtake as inverter sales have slowed down significantly.
Improving subsidiary performance along with mutual fund returns led to
higher dividend income to the effect of | 30.7 crore. The management
viewed this as a just practice considering it is aligning profits and costs
from its smelter subsidiaries arisen due to EIL itself.
V a l u a t i o n
Exide as a market leader in the battery business acts as a strong proxy to
auto OEM and replacement demand. Going ahead, we expect the trade to
sales ratio to improve in H2FY12E. At the CMP of | 154, the stock is
trading at12.6x FY13E EPS of | 10.4. We have valued the stock on an
SOTP basis with the core business at 14x FY13E EPS of | 10.4 to arrive at
a per share value of | 146, valuing other subsidiaries and investments at |
25/share to arrive at a target price of | 171. We maintain our BUY rating
on the stock.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
A n t i c i p a t e d m a r g i n c h e e r d e l a y e d t i l l H 2 F Y 1 2 E …
Exide Industries (EIL) posted Q1FY12 results that were below our
estimates with net sales at | 1243.6 crore (I-direct estimate: | 1343.9
crore). Revenues moved up marginally (1.4% QoQ) from | 1226 crore in
Q4FY11 (adjusted for one-time rebate received of | 20 crore) to | 1243.6
crore. The lacklustre revenue performance can be attributed to lower
OEM demand (only ~8% growth YoY) and dwindling inverter battery
sales. The EBITDA margins contracted (down 490 bps YoY and 110 bps
QoQ) due to higher RM costs (up 75 bps QoQ). The higher lead prices (up
~21% YoY) and subdued pricing in key segments resulted in inability to
have complete pass on. The PAT was boosted by strong recurring
dividend income of | 30.8 crore arising from subsidiaries (~| 20 crore)
and mutual fund investments (~| 9 crore). The PAT margin came in at
13.1% (flattish QoQ) at | 163.2 crore (I-direct estimate: | 184.5 crore).
ƒ Highlights of the quarter
EIL’s Q1FY12 results were highlighted by slower replacement offtake from
dealers and higher lead prices. The expected increase in sales to trade
offtake (1.2:1) was subdued QoQ. This was primarily as dealer’s
confidence in the aftermarket segment, which had been lost last year (~8-
10% market share loss in FY11), could not be completely taken back. EIL
continues to augment its capacities and is on track to touch ~3.3 crore
units in Q4FY12E. The industrial segment (down ~26% YoY) continued to
witness lower offtake as inverter sales have slowed down significantly.
Improving subsidiary performance along with mutual fund returns led to
higher dividend income to the effect of | 30.7 crore. The management
viewed this as a just practice considering it is aligning profits and costs
from its smelter subsidiaries arisen due to EIL itself.
V a l u a t i o n
Exide as a market leader in the battery business acts as a strong proxy to
auto OEM and replacement demand. Going ahead, we expect the trade to
sales ratio to improve in H2FY12E. At the CMP of | 154, the stock is
trading at12.6x FY13E EPS of | 10.4. We have valued the stock on an
SOTP basis with the core business at 14x FY13E EPS of | 10.4 to arrive at
a per share value of | 146, valuing other subsidiaries and investments at |
25/share to arrive at a target price of | 171. We maintain our BUY rating
on the stock.
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