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Exide: 2QFY04 PAT up 45% YoY

Oct 20, 2003

Exide, India’s leading battery manufacturer, has reported robust 2QFY04 results. While the topline of the company has registered a 9% YoY increase, the bottomline of the company has increased by an impressive 45% during the same period. The net profit of the company has risen mainly on account of improved sales and a reduction in interest expenses.

(Rs m) 2QFY03 2QFY04 Change 1HFY03 1HFY04 Change
Net Sales 2,263 2,464 8.9% 4,210 4,789 13.8%
Other Income 8 5 -31.6% 9 9 3.4%
Expenditure 1,848 1,990 7.7% 3,444 3,916 13.7%
Operating Profit (EBDIT) 416 474 14.0% 766 873 14.0%
Operating Profit Margin (%) 18.4% 19.2%   18.2% 18.2%  
Interest 76 34 -55.4% 194 70 -63.6%
Depreciation 116 124 7.4% 228 272 19.0%
Profit before Tax 232 321 38.3% 352 540 53.2%
Extraordinary items (12)     (12)    
Tax (78) (114) 47.1% -120 -194 61.7%
Profit after Tax/(Loss) 143 207 45.0% 221 346 56.8%
Net profit margin (%) 6.3% 8.4%   5.2% 7.2%  
No. of Shares 35.7 35.7   35.7 35.7  
Diluted Earnings per share* 16.0 23.2   12.4 19.4  
P/E Ratio   4.9     5.9  
(* annualised)            

The company sells batteries mainly under the automotive and the industrial segments. Let us see how each of these segments performed during 1HFY04 as compared to the corresponding period in the previous year.

Automotive segment: This segment contributed 72% to the company’s topline during 1HFY04 and registered a YoY growth of 14.8%. Exports from this segment also grew by 14%. The company’s two brands in the automotive segment, Exide and Standard Furukawa, grew by 15.7% and 9.7% respectively. The company’s another brand, Cornex, which caters to the lower end of the market also saw an impressive growth of over 40% in 1HFY04. As per a leading business daily, the company is in talks with Rover MG and Tata Motors, for the supply of automotive batteries as a part of their global outsourcing deals.

Industrial segment: This segment contributed 28% to the company’s topline and grew by 17.7% during 1HFY04 compared to the corresponding period in the previous fiscal. The exports from this segment grew by 62% with South East Asia and Europe emerging as the company’s most popular markets. The company is also exporting batteries to Japan and China.

Although the company managed to reduce its interest expenses by around 64%, it was more than offset by a concomitant 62% rise in tax incidence.

The stock of the company is currently trading at Rs 114, implying a P/E of 4.9x annualized 2QFY04 earnings. Considering the growth prospects of the automobile industry (an industry on which Exide is directly dependant on) and its market leadership in the OEM segment, we expect higher growth in turnover in FY04 and FY05. The reduction in customs duty on lead and anti-dumping duty on imports are also big positives. However, realisations will continue to remain under pressure, which has been the case historically.

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