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Exide Ind.: A better fourth quarter - Views on News from Equitymaster
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Exide Ind.: A better fourth quarter
May 3, 2016

Exide Industries announced fourth quarter results of the financial year 2015-2016 (4QFY16). The company has reported a 7% YoY and 29% YoY growth in revenues and net profits respectively. Here is our analysis of the results.

Performance summary
  • Revenues grow by 7% YoY during 4QFY16 as demand for both automotive and industrial batteries show some improvement.
  • Operating margins improve by 0.7% to 15.2% during the quarter on account of lower raw material costs and other expenditure (as percentage of sales).
  • Net profits grow by 29% YoY led by higher other income and benign rise in tax expenses.

    Standalone financials: A snapshot
    (Rs m) 4QFY15 4QFY16 Change FY15 FY16 Change
    Net sales 16,474 17,614 6.9% 68,751 68,237 -0.7%
    Expenditure 14,092 14,939 6.0% 59,579 57,986 -2.7%
    Operating profit (EBDITA) 2,382 2,674 12.3% 9,172 10,251 11.8%
    EBDITA margin (%) 14.5% 15.2% 13.3% 15.0%
    Other income 57 226 300.4% 225 416 85.1%
    Depreciation 391 445 13.8% 1,395 1,602 14.8%
    Interest 3 0 17 3 -82.0%
    Profit before tax 2,045 2,455 20.1% 7,985 9,063 13.5%
    Tax 669 680 1.7% 2,526 2,835 12.2%
    Profit after tax / (loss) 1,376 1,775 29.0% 5,459 6,228 14.1%
    Net profit margin (%) 8.4% 10.1% 7.9% 9.1%
    No. of shares (m) 850.0 850.0
    Diluted earnings per share (Rs)* 7.3
    Price to earnings ratio (x)* 19.7

    * based on 12 month trailing earnings & excluding extraordinary items

    • What has driven performance in FY16?

      • Exide's revenues fell by 1% YoY during the year as there was no major improvement in demand for both OEM and industrial batteries. Having said that, there was some improvement seen across both the segments in the fourth quarter of FY16. The weak demand for industrial batteries during the year was largely attributed to flat to negative growth for segments such as railway, power and inverters. Growth in the replacement segment also remained modest contributing to the drop in overall revenues for the year.
      • Operating margins, however, expanded by 1.7% to 15% during the year. This was largely on account of lower raw material costs and other expenditure (as percentage of sales). From 66.2% of sales in FY15, raw material costs fell to 64% of sales in FY16 and could be attributed to benign lead prices. The management intends to focus on expanding margins going forward. This is expected to come about from technology upgradation and cost reduction initiatives.
      • A 12% YoY growth in operating profits and higher other income contributed to the decent 14% YoY growth in net profits for the year.
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