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Exide: Reflecting the auto sector - Views on News from Equitymaster
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  • Jan 21, 2002

    Exide: Reflecting the auto sector

    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.

    (Rs m) 3QFY01 3QFY02 Change 9mFY01 9mFY02 Change
    Net Sales 1,732 1,963 13.3% 5,308 5,732 8.0%
    Other Income 2 0 -81.0% 6 5 -28.1%
    Expenditure 1,436 1,641 14.3% 4,283 4,717 10.1%
    Operating Profit (EBDIT) 296 322 8.6% 1,026 1,015 -1.0%
    Operating Profit Margin (%) 17.1% 16.4%   19.3% 17.7%  
    Interest 111 88 -20.4% 365 336 -8.2%
    Depreciation 109 114 4.5% 318 341 7.0%
    Profit before Tax 79 121 52.4% 348 344 -1.3%
    Extraordinary items (8) (11) - (24) (32) -
    Tax 3 33 - 45 75 66.7%
    Profit after Tax/(Loss) 69 78 12.8% 279 236 -15.4%
    Net profit margin (%) 4.0% 3.9%   5.3% 4.1%  
    No. of Shares (m) 36.0 36.0   36.0 36.0  
    Diluted Earnings per share* 7.6 8.6   10.3 8.8  
    P/E Ratio   7.2     7.1  
    (* annualised)            

    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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    Aug 21, 2017 03:37 PM


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