X

Sign up for Equitymaster's free daily newsletter, The 5 Minute WrapUp and get access to our latest Multibagger guide (2018 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 Ind.: A slow start - Views on News from Equitymaster
StockSelect
  • MyStocks

MEMBER'S LOGINX

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

Exide Ind.: A slow start
Aug 11, 2015

Exide Industries announced first quarter results of the financial year 2015-2016 (1QFY16). The company has reported a 6% YoY decline in sales, while net profits have fallen by 16% YoY. Here is our analysis of the results.

Performance summary
  • Revenues fall by 6% YoY during 1QFY16 on the back of tepid demand for OEM and industrial batteries.
  • Operating margins fall marginally by 0.4% to 14.8% during the quarter on account of higher staff costs (as percentage of sales).
  • Led by the poor performance at the operating level and lower other income, net profits fall by 16% YoY.

Standalone financials: A snapshot
(Rs m) 1QFY15 1QFY16 Change
Net sales 19,093 17,995 -5.8%
Expenditure 16,182 15,336 -5.2%
Operating profit (EBDITA) 2,911 2,660 -8.6%
EBDITA margin (%) 15.2% 14.8% -3.1%
Other income 87 31 -64.5%
Depreciation 323 368 13.7%
Interest 2 2 -12.5%
Profit before tax 2,673 2,321 -13.2%
Tax 820 769 -6.2%
Profit after tax / (loss) 1,853 1,552 -16.2%
Net profit margin (%) 9.7% 8.6%  
No. of shares (m) 850.0 850.0  
Diluted earnings per share (Rs)*   6.1  
Price to earnings ratio (x)*   26.3  
* based on 12 month trailing earnings & excluding extraordinary items

What has driven performance in 1QFY16?
  • Exide's revenues fell by 6% YoY during the quarter as the demand for both OEM and industrial batteries continued to remain subdued. The weak demand for industrial batteries was largely attributed to flat to negative growth for segments such as railway, power and inverters. The silver lining in the cloud was the replacement demand for automotive batteries, which remained healthy.

  • Operating margins contracted marginally by 0.4% to 14.8% during the quarter. This was largely on account of higher staff costs. From 5.2% of sales in 1QFY15, staff costs rose to 6.2% of sales in 1QFY16. Raw material costs and other expenditure remained under control. The management intends to focus on expanding margins going forward. This is expected to come about from technology upgradation and cost reduction initiatives. Further, benign lead prices are also expected to help the company in the form of lower input costs.

  • Led by the poor performance at the operating level and lower other income, net profits for the quarter fell by 16% YoY.
What to expect?
At the current price of Rs 159, the stock is trading at a price to earnings multiple of 14.7 times our estimated FY17 earnings. The management has stated the current utilization levels for automotive and industrial battery capacities at 80% and 83% respectively. Hence, it is looking to incur capex of around Rs 7-8 bn in FY16. This is to cater to increase in demand once the economic scenario improves. Besides this, focus areas will be increasing the contribution from the telecom segment as well as improving margins to around 15% over the next couple of years. Despite the correction, current valuations do not leave room for much upside. Consequently, our view is that investors not buy the stock at the current price levels.

To Read the Full Story, Subscribe or Sign In



DISCLOSURES UNDER SEBI (RESEARCH ANALYSTS) REGULATIONS, 2014
INTRODUCTION:
Equitymaster Agora Research Private Limited (hereinafter referred to as "Equitymaster"/"Company") was incorporated on October 25, 2007. Equitymaster is a joint venture between Quantum Information Services Private Limited (QIS) and Agora group. Equitymaster is a SEBI registered Research Analyst under the SEBI (Research Analysts) Regulations, 2014 with registration number INH000000537.

BUSINESS ACTIVITY:
An independent research initiative, Equitymaster is committed to providing honest and unbiased views, opinions and recommendations on various investment opportunities across asset classes.

DISCIPLINARY HISTORY:
There are no outstanding litigations against the Company, it subsidiaries and its Directors.

GENERAL TERMS AND CONDITIONS FOR RESEARCH REPORT:
For the terms and conditions for research reports click here.

DETAILS OF ASSOCIATES:
Details of Associates are available here.

DISCLOSURE WITH REGARDS TO OWNERSHIP AND MATERIAL CONFLICTS OF INTEREST:
  1. 'subject company' is a company on which a buy/sell/hold view or target price is given/changed in this Research Report
  2. Neither Equitymaster, it's Associates, Research Analyst or his/her relative have any financial interest in the subject company.
  3. Neither Equitymaster, it's Associates, Research Analyst or his/her relative have actual/beneficial ownership of one percent or more securities of the subject company at the end of the month immediately preceding the date of publication of the research report.
  4. Neither Equitymaster, it's Associates, Research Analyst or his/her relative have any other material conflict of interest at the time of publication of the research report.
DISCLOSURE WITH REGARDS TO RECEIPT OF COMPENSATION:
  1. Neither Equitymaster nor it's Associates have received any compensation from the subject company in the past twelve months.
  2. Neither Equitymaster nor it's Associates have managed or co-managed public offering of securities for the subject company in the past twelve months.
  3. Neither Equitymaster nor it's Associates have received any compensation for investment banking or merchant banking or brokerage services from the subject company in the past twelve months.
  4. Neither Equitymaster nor it's Associates have received any compensation for products or services other than investment banking or merchant banking or brokerage services from the subject company in the past twelve months.
  5. Neither Equitymaster nor it's Associates have received any compensation or other benefits from the subject company or third party in connection with the research report.
GENERAL DISCLOSURES:
  1. The Research Analyst has not served as an officer, director or employee of the subject company.
  2. Equitymaster or the Research Analyst has not been engaged in market making activity for the subject company.
Definitions of Terms Used:
  1. Buy recommendation: This means that the investor could consider buying the concerned stock at current market price keeping in mind the tenure and objective of the recommendation service.
  2. Hold recommendation: This means that the investor could consider holding on to the shares of the company until further update and not buy more of the stock at current market price.
  3. Buy at lower price: This means that the investor should wait for some correction in the market price so that the stock can be bought at more attractive valuations keeping in mind the tenure and the objective of the service.
  4. Sell recommendation: This means that the investor could consider selling the stock at current market price keeping in mind the objective of the recommendation service.
Feedback:
If you have any feedback or query or wish to report a matter, please do not hesitate to write to us.

Small Investments
BIG Returns

Zero To Millions Guide 2018
Get our special report, Zero To Millions
(2018 Edition) Now!
We will never sell or rent your email id.
Please read our Terms

EXIDE INDUSTRIES SHARE PRICE


Dec 12, 2017 (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 - GABRIEL (I) COMPARISON

COMPARE EXIDE INDUSTRIES WITH

MARKET STATS