Exide: What next? - Views on News from Equitymaster

Helping You Build Wealth With Honest Research
Since 1996. Try Now

  • MyStocks

MEMBER'S LOGINX

     
Login Failure
   
     
   
     
 
 
 
(Please do not use this option on a public machine)
 
     
 
 
 
  Sign Up | Forgot Password?  

Exide: What next?

Apr 25, 2003

Exide Industries, India's largest automotive battery supplier, announced its March quarter and FY03 results. For the full year, the company declared a topline growth of 11% YoY, while its bottomline grew significantly by 67% YoY. We take a look at the performance of the company, which derives most of its revenues from the automobile industry.

(Rs m) 4QFY024FQY03% changeFY02FY03% change
Net Sales 2,183 2,405 10.1% 7,915 8,78511.0%
Other Income 52-56.9% 10 14.145.4%
Expenditure 1,886 1,956 3.7% 6,603 7,1838.8%
Operating Profit (EBDIT) 297 449 51.0% 1,313 1,602 22.1%
Operating Profit Margin (%) 13.6%18.7%16.6%18.2%
Interest 80 36 -54.5% 415 292-29.7%
Depreciation 99 116 17.2% 440 4614.9%
Profit before Tax 124 299 141.7% 467 863 84.8%
Extraordinary items (11)(43)304.7% (43)(55)28.1%
Tax 3585142.9% 110 285159.1%
Profit after Tax/(Loss) 78 170 118.8% 314 523 66.5%
Net profit margin (%) 3.6%7.1%4.0%6.0%
No. of Shares (eoy) (m) 35.7 35.7 35.7 35.7
Diluted earnings per share (Rs)* 8.7 19.1 8.8 14.6
P/E ratio (x) 6.6
(* annualised)

The performance of the company in FY03 is far better than what one saw in FY02. This is primarily due to the fact that sale of automobiles during FY03 has remained robust, especially commercial vehicles. Since the company is one of the key supplier to many OEM (original equipment manufacturers in the country) like Telco and Maruti, it has benefited immensely. Having said that, we expect the pressure on prices to have continued in FY03 also, as the bargaining power of the auto ancillary manufacturers is on the lower side. To put things in perspective, average realisation of batteries has declined at a CAGR of 5% in the last six years. We expect the trend to continue in FY04 as well.

The company continues to face competition not only from other manufacturers like Amara Raja Batteries, Amco Batteries (two wheeler battery segment) but also from the non-branded battery market, which has a very small marketshare. Exide has been able to out perform its competitors. The improvement in operating margins is primarily on account lower cost of raw material i.e. lead (the government reduced customs duty in both Budget 2002 as well as 2003). Raw materials constitute to around 50% of total expenses. The rise in margins is far higher than our expectations.

Expense snapshot
% of salesFY02FY03
Increase/decrease in stock1.0%0.6%
Consumption of raw material51.1%48.7%
Staff cost9.5%9.4%
Other expenditure23.8%24.2%

Higher cash flow from operation arising from increased capacity utilisation seem to have been utilised in retiring high cost debts (average cost of debt for the company in FY02 was 11%). Despite higher write-off towards the implementation of ERP and VRS, net profit for FY03 has leap frogged by 67%. This performance is significantly higher than estimate and reflects the benefit from robustness in CV demand (industry sales rose by 31% in FY03).

The stock is currently trading at Rs 95 at a P/E multiple of 6.6x FY03 earnings. During December 2001 Exide announced a buy back at Rs 70, the buy back offer ended in December 2002. Exide now has announced a 1:1 bonus issue apart from a dividend of Rs 4 per share for the year ending 2003 (4% dividend yield). Going forward, the performance of Exide would obviously depend on the automobile industry, which is already shown signs of slowing down. But we expect savings at the operating level from lower raw material costs to partially offset pricing pressure. Nevertheless, operating margins is expected to be lower for FY04.

Equitymaster requests your view! Post a comment on "Exide: What next?". Click here!

  

More Views on News

EXIDE INDUSTRIES 2020-21 Annual Report Analysis (Annual Result Update)

Aug 12, 2021 | Updated on Aug 12, 2021

Here's an analysis of the annual report of EXIDE INDUSTRIES for 2020-21. It includes a full income statement, balance sheet and cash flow analysis of EXIDE INDUSTRIES. Also includes updates on the valuation of EXIDE INDUSTRIES.

EXIDE INDUSTRIES Announces Quarterly Results (1QFY22); Net Profit Up 334.0% (Quarterly Result Update)

Aug 3, 2021 | Updated on Aug 3, 2021

For the quarter ended June 2021, EXIDE INDUSTRIES has posted a net profit of Rs 315 m (up 334.0% YoY). Sales on the other hand came in at Rs 35 bn (up 40.2% YoY). Read on for a complete analysis of EXIDE INDUSTRIES's quarterly results.

EXIDE INDUSTRIES Announces Quarterly Results (3QFY21); Net Profit Up 23.2% (Quarterly Result Update)

Feb 1, 2021 | Updated on Feb 1, 2021

For the quarter ended December 2020, EXIDE INDUSTRIES has posted a net profit of Rs 2 bn (up 23.2% YoY). Sales on the other hand came in at Rs 28 bn (up 16.2% YoY). Read on for a complete analysis of EXIDE INDUSTRIES's quarterly results.

India's Top EV Battery Makers are set for Sky High Returns (Views On News)

Sep 30, 2021

These 5 leading EV battery makers are poised to transform India's EV ecosystem.

5 Indian EV Battery Makers to Watch Out for (Views On News)

Jul 6, 2021

These companies are racing at warp-speed to make India the hub of EV battery manufacturing.

More Views on News

Most Popular

Infosys vs TCS: Which is Better? (Views On News)

Nov 26, 2021

In the post pandemic era, the top two IT companies in India are fighting to capture the growing demand for IT.

This Multibagger Stock Zooms 20% After Dolly Khanna Buys Stake (Views On News)

Nov 24, 2021

Shares of this edible oil company zoomed over 50% in three days after ace investor bought around 1% stake.

6 Popular Stocks that Turned into Penny Stocks (Views On News)

Nov 27, 2021

A look at popular stocks that crashed big time and never recovered, i.e. which went from 'Multibaggers to Multibeggers'.

How to Find Your Next 10-Bagger in this Market (Profit Hunter)

Nov 19, 2021

The #1 make or break factor in your portfolio you shouldn't ignore.

MobiKwik IPO Opens for Subscription Soon. Key Things to Know Before Subscribing. (Views On News)

Nov 20, 2021

The Rs 19 bn issue is set to hit the market soon.

More

Become A Smarter Investor
In Just 5 Minutes

Multibagger Stock Guide 2022
Get our special report Multibagger Stocks Guide (2022 Edition) Now!
We will never sell or rent your email id.
Please read our Terms

EXIDE INDUSTRIES SHARE PRICE


Dec 1, 2021 (Close)

TRACK EXIDE INDUSTRIES

  • Track your investment in EXIDE INDUSTRIES with Equitymaster's Portfolio Tracker. Set live price alerts, get research alerts and more. Get access now...
  • Add To MyStocks

MORE ON EXIDE INDUSTRIES

EXIDE INDUSTRIES - HBL POWER COMPARISON

COMPARE EXIDE INDUSTRIES WITH

MARKET STATS