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R e s u r g e n c e p a t h i l l u m i n a t e d ! ! !
Exide Industries (EIL) reported an improved set of numbers for Q3FY12
with revenues rising 6.3% QoQ to | 1250.1 crore (I-direct estimate: |
1213.8 crore). The revenue performance was driven by higher
replacement offtake in both the automotive and industrial battery
segments. EBITDA margins, which had contracted to 7.7% in Q2FY12,
jumped to 13.2% (up 548 bps QoQ) with RM cost as a proportion of sales
dipping 487 bps sequentially. The automotive and industrial gross
margins jumped to 14.8% and 31.8%, respectively, as price hikes to OEM
happen with a one quarter lag. Lead price for the quarter stood at
| 131/kg (down ~2%QoQ). The PAT more than doubled sequentially to
|104.3 crore but is still down 16.2% YoY.
Highlights of the quarter
The volume bounce back is a major positive during the quarter. EIL
clocked sturdy SLI volume of 2.05 million batteries (up 3.5% QoQ) with
two-wheeler sales touching 3.55 million units (up 2.6% QoQ) despite
lower OEM demand in November and December. The industrial sales of
403 MnAH (up 3.1% QoQ) were driven by home inverter and power backup segments. These witnessed strong traction as volumes jumped ~40%
YoY while the low margin telecom segment saw volumes shrinking
~50%. The margin performance was aided by higher ratio of replacement
sales to OEM at 1.24:1 up from ~1:1 in Q2FY12. The company has
recently acquired a facility in Uttarakhand for ~| 17 crore to supply fully
built inverters. The project is expected to generate incremental inverter
battery volumes of ~30,000/month.
V a l u a t i o n
We expect an improved performance from EIL as replacement demand
picks up coupled with stable lead prices. We have upgraded our core
target P/E multiple to 15x FY13E EPS of | 8.2. At the CMP of | 128, the
stock is trading at13.8x FY13E EPS. We have valued the stock on an SOTP
basis with the core business at | 122, valuing other subsidiaries and
investments at | 19/share to arrive at target price of | 141. We had
recommended that our long term investors accumulate the stock at lower
levels and continue to have a BUY rating on the stock
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
R e s u r g e n c e p a t h i l l u m i n a t e d ! ! !
Exide Industries (EIL) reported an improved set of numbers for Q3FY12
with revenues rising 6.3% QoQ to | 1250.1 crore (I-direct estimate: |
1213.8 crore). The revenue performance was driven by higher
replacement offtake in both the automotive and industrial battery
segments. EBITDA margins, which had contracted to 7.7% in Q2FY12,
jumped to 13.2% (up 548 bps QoQ) with RM cost as a proportion of sales
dipping 487 bps sequentially. The automotive and industrial gross
margins jumped to 14.8% and 31.8%, respectively, as price hikes to OEM
happen with a one quarter lag. Lead price for the quarter stood at
| 131/kg (down ~2%QoQ). The PAT more than doubled sequentially to
|104.3 crore but is still down 16.2% YoY.
Highlights of the quarter
The volume bounce back is a major positive during the quarter. EIL
clocked sturdy SLI volume of 2.05 million batteries (up 3.5% QoQ) with
two-wheeler sales touching 3.55 million units (up 2.6% QoQ) despite
lower OEM demand in November and December. The industrial sales of
403 MnAH (up 3.1% QoQ) were driven by home inverter and power backup segments. These witnessed strong traction as volumes jumped ~40%
YoY while the low margin telecom segment saw volumes shrinking
~50%. The margin performance was aided by higher ratio of replacement
sales to OEM at 1.24:1 up from ~1:1 in Q2FY12. The company has
recently acquired a facility in Uttarakhand for ~| 17 crore to supply fully
built inverters. The project is expected to generate incremental inverter
battery volumes of ~30,000/month.
V a l u a t i o n
We expect an improved performance from EIL as replacement demand
picks up coupled with stable lead prices. We have upgraded our core
target P/E multiple to 15x FY13E EPS of | 8.2. At the CMP of | 128, the
stock is trading at13.8x FY13E EPS. We have valued the stock on an SOTP
basis with the core business at | 122, valuing other subsidiaries and
investments at | 19/share to arrive at target price of | 141. We had
recommended that our long term investors accumulate the stock at lower
levels and continue to have a BUY rating on the stock
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