Sign up for Equitymaster's free daily newsletter, The 5 Minute WrapUp and get access to our latest Multibagger guide (2017 Edition) on picking money-making stocks.

This is an entirely free service. No payments are to be made.

Download Now Subscribe to our free daily e-letter, The 5 Minute WrapUp and get this complimentary report.
We hate spam as much as you do. Check out our Privacy Policy and Terms Of Use.
Exide: Poised for pace - Views on News from Equitymaster
  • E-MAIL
  • A  A  A
  • May 3, 2002

    Exide: Poised for pace

    Exide Industries, the market leader in the Indian automotive battery segment, has posted a 24% fall in net profits for the full year ended March 31, 2002. However, turnover during the same period has gone up 3% to Rs 7,915 m.

    (Rs m) 4QFY01 4QFY02 Change FY01 FY02 Change
    Net Sales 2,378 2,183 -8.2% 7,702 7,915 2.8%
    Other Income 4 5 24.4% 11 10 -7.6%
    Expenditure 2,006 1,886 -6.0% 6,304 6,603 4.7%
    Operating Profit (EBDIT) 372 297 -20.1% 1,398 1,313 -6.1%
    Operating Profit Margin (%) 15.6% 13.6%   18.1% 16.6%  
    Interest (net) 88 80 -9.3% 453 415 -8.4%
    Depreciation 116 99 -14.0% 434 440 1.4%
    Profit before Tax 173 124 -28.5% 521 467 -10.3%
    Extraordinary items (12) (11) - (36) (43) -
    Tax 25 35 - 70 110 57.1%
    Profit after Tax/(Loss) 136 78 -42.9% 416 314 -24.4%
    Net profit margin (%) 5.7% 3.6%   5.4% 4.0%  
    No. of Shares (m) 36.0 35.7   36.0 35.7  
    Diluted Earnings per share 15.1 8.7   11.5 8.8  
    P/E Ratio (x)         7.5  

    Exide derives almost 99% of revenues from sale of batteries, catering both to automotive and industrial segments. Automotive battery segment contributes 60% to revenues and as a result, is higly related to the performance of the auto industry. It has a commanding market share as a supplier to most of the Original Equipment Manufacturers (OEMs) in India (90%). It also has a 63% market share in the replacement market. In FY02, except for two-wheelers, passenger cars and to a certain extent, medium and heavy commercial vehicles, demand for automobiles remained subdued. Though Exide to managed to post a 3% rise in sales for FY02, average realisation is estimated to have declined by atleast 5% in the wake of slowdown in the economy. Since bargaining power of the customer is higher in the segment, the company cannot pass on the rise in input costs like 'lead' to OEMs.

    This along with a industrial unrest in its manufacturing unit in Hosur have exercised a downward pressure on operating margins for FY02. Apart from OEMs, Exide's leadership in the replacement segment is being threatened by cheaper imports from countries like China, Korea and Bangaladesh. Given the fact that price realisations are higher in the replacement segment, this has been a cause of concern. We had projected a net profit for FY02 at Rs 375 m on the back of a 75 basis points fall in operating margins. However, the industrial unrest at Hosur has resulted in steeper fall in margins consequently lowering profits of the company.

    Extraordinary item here pertains towards amortisation of expenditure incurred towards Y2K/ERP implementation costs, voluntary retirement scheme (VRS) and expenditure towards website development. Consequent to the buyback scheme, equity share capital stands reduced by 270,472 shares. Exide has declared a dividend of Rs 3.5 per share.

    The stock currently trades at Rs 66 implying a P/E multiple of 7.5x FY02 earnings. As far as future outlook of the company is concerned, the Finance Minister in his recent budget had lowered the import duty on lead from 35% to 25% and this has given much needed relief to the indigenous battery manufacturer. As India moves towards WTO norms, import duty on key raw materials is expected to fall and this would benefit the company in the long run. Similarly, import duty on aluminium has also been brought down to 15%. Since raw material costs account for 60% of operating expenditure of Exide, the reduction in duties augurs well for the company in future.

    Besides, outlook for the auto sector continues to remain positive and both multinational and domestic auto majors have lined up a number of models in the passenger car segment. With a commanding 90% market share in the OEM category, Exide is well poised to capitalise on any upturn in industry volumes. Having said that, lack of pricing power and increased competition from imports would continue to have a bearing on profits of Exide.



    Equitymaster requests your view! Post a comment on "Exide: Poised for pace". Click here!


    More Views on News

    Exide Industries: Good show amid the broad based recovery! (Quarterly Results Update - Detailed)

    Oct 28, 2016

    Good show amid the broad based recovery

    Atul Auto: Demonetization Impacts Volumes and Profitability (Quarterly Results Update - Detailed)

    Mar 1, 2017

    Atul Auto has reported a 11.2% YoY decline in the topline while the bottomline has declined by 23% YoY.

    Endurance Technologies Ltd (IPO)

    Oct 4, 2016

    Equitymaster analyses Initial Public Offering (IPO) of Endurance Technologies Limited

    GNA Axles Limited (IPO)

    Sep 14, 2016

    Should you subscribe to GNA Axle IPO?

    Exide Ind.: Strong Start to the Year (Quarterly Results Update - Detailed)

    Jul 28, 2016

    Exide Industries has reported a 14% YoY and 10% YoY growth in revenues and net profits respectively for the quarter ended June 2016.

    More Views on News

    Most Popular

    A 'Backdoor' to Multibaggers: It's Like Investing in Asian Paints Ten Years Ago(The 5 Minute Wrapup)

    Aug 10, 2017

    Don't miss these proxy bets on growing companies or in a few years you will be looking back with regret.

    The Most Important Innovation in Finance Since Gold Coins(Vivek Kaul's Diary)

    Aug 10, 2017

    Bill connects the dots...between money and growth, real money and real resources, gold and cryptocurrencies...and between gold, cryptocurrencies, and time.

    Signs of Life in the India VIX(Daily Profit Hunter)

    Aug 12, 2017

    The India VIX is up 36% in the last week. Fear has gone up but is still low by historical standards.

    Bitcoin Continues Stellar Rise(Chart Of The Day)

    Aug 10, 2017

    Bitcoin hits an all-time high, is there more upside left?

    5 Steps To Become Financially Independent(Outside View)

    Aug 16, 2017

    Ensure your financial Independence, and pledge to start the journey towards financial freedom today!

    Copyright © Equitymaster Agora Research Private Limited. All rights reserved.
    Any act of copying, reproducing or distributing this newsletter whether wholly or in part, for any purpose without the permission of Equitymaster is strictly prohibited and shall be deemed to be copyright infringement.

    LEGAL DISCLAIMER: Equitymaster Agora Research Private Limited (hereinafter referred as 'Equitymaster') is an independent equity research Company. Equitymaster is not an Investment Adviser. Information herein should be regarded as a resource only and should be used at one's own risk. This is not an offer to sell or solicitation to buy any securities and Equitymaster will not be liable for any losses incurred or investment(s) made or decisions taken/or not taken based on the information provided herein. Information contained herein does not constitute investment advice or a personal recommendation or take into account the particular investment objectives, financial situations, or needs of individual subscribers. Before acting on any recommendation, subscribers should consider whether it is suitable for their particular circumstances and, if necessary, seek an independent professional advice. This is not directed for access or use by anyone in a country, especially, USA or Canada, where such use or access is unlawful or which may subject Equitymaster or its affiliates to any registration or licensing requirement. All content and information is provided on an 'As Is' basis by Equitymaster. Information herein is believed to be reliable but Equitymaster does not warrant its completeness or accuracy and expressly disclaims all warranties and conditions of any kind, whether express or implied. Equitymaster may hold shares in the company/ies discussed herein. As a condition to accessing Equitymaster content and website, you agree to our Terms and Conditions of Use, available here. The performance data quoted represents past performance and does not guarantee future results.

    SEBI (Research Analysts) Regulations 2014, Registration No. INH000000537.

    Equitymaster Agora Research Private Limited. 103, Regent Chambers, Above Status Restaurant, Nariman Point, Mumbai - 400 021. India.
    Telephone: +91-22-61434055. Fax: +91-22-22028550. Email: info@equitymaster.com. Website: www.equitymaster.com. CIN:U74999MH2007PTC175407

    Become A Smarter Investor In
    Just 5 Minutes

    Multibagger Stocks Guide 2017
    Get our special report, Multibagger Stocks Guide (2017 Edition) Now!
    We will never sell or rent your email id.
    Please read our Terms


    Aug 22, 2017 01:40 PM


    • 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



    Detailed Financial Information With Charts