Exide Industries Ltd (EIL) sales have dropped by 8.4% YoY in the 3QFY01. This is mainly due to lower demand from the automobile segment. As a result of higher competition in the auto battery segment and the rising lead prices, the company's operating profits fell by 18% YoY to Rs 296 m in the 3QFY01. The company's net profit declined by a dismal 42% YoY to Rs 69 m for the 3QFY01.
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Considering that automobile company volumes for the 3QFY01 have been worse off than their 1HFY01 figures, hence the demand conditions for Exide too were worse off.
As a result the 3Q margins have been worse off than the 1HFY01 figures. Infact in the 1HFY01, the company reported a 6% increase in net profit to Rs 211 m and an improvement in operating margins to 16.5% from 15.6% in the 1HFY00. The company's operating margins have declined by 160 basis points YoY to 13.9% in the 3QFY01.
EIL is India's largest automotive storage battery manufacturer. It also manufactures industrial batteries which find use in heavy-duty applications like power and telecommunications. After it took over Standard Batteries in FY98, Exide commands a 92% market share of the automobile battery market in the organised OEM segment and 85% of the organised replacement market.
As a result of the dismal 3QFY01 performance we need to revise our full year forecast of Rs 534 m for FY01E downwards by atleast 25%.
On the current price of Rs 100, Exide is trading at 7.4x FY2000 EPS of Rs 13.6. Its shares have opened weak and have fallen by 5%.
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