The third quarter performance of Exide Industries, the market leader in the automotive batteries sector, clearly reflects the rise in auto sales in recent months. While turnover has increased notably, profits for the first nine months of the current fiscal have declined.
Operating Profit (EBDIT)
Operating Profit Margin (%)
Profit before Tax
Profit after Tax/(Loss)
Net profit margin (%)
No. of Shares (m)
Diluted Earnings per share*
Since the company has almost 90% market share in the OEM (Original Equipment Manufacturer) automotive batteries segment, its performance is closely related with that of the auto sector. Though the company reported a 11% growth in sales in 1QFY02, turnover fell by 18% in 2QFY02 on account of weak auto demand. For 1HFY02, sales was lower by 7%. But things have started to look back since then. While two-wheeler demand has been robust, commercial vehicle and passenger car demand picked up in 3QFY02, which has enabled it to post a 13% rise in sales in 3QFY02.
Operating margins, contrary to 2QFY02, are lower by 70 basis points in 3QFY02. This could be attributed towards stiff competition, both from domestic manufacturers and imports, on the replacement market front. The company's management had expressed concerns on imports and after repeated representations, the ministry imposed additional anti-dumping duty this year. Given the fact that margins are on the higher side in the replacement market, margins for FY02 is expected to be on the lower side despite the cost cutting initiatives taken by Exide.
Exception items pertain towards expenditure on Y2K compliance, ERP implementation, voluntary retirement expenses and amortisation of expenses towards website development. Tax liability has increased significantly on account of new accounting standards on the deferred taxation front. Exide currently trades at Rs 62 implying a P/E multiple of 7.1x annualised nine months earnings.
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