INSUBCONTINENT EXCLUSIVE:
Emkay Global has retained buy rating on Exide Industries with a target price of Rs 189 (Rs 248 earlier), based on 15 times FY22E EPS (18
The value of the insurance business is at Rs 28/share
Valuations have notably corrected, with FY21E core P/E at 12 times, vs
the historical average of 22 times
The company has been improving competitiveness and narrowing the growth gap with Amara Raja
Led by exposure to replacement demand, recovery is expected sooner than other segments.
The share price moved up by 2.52 per cent from its
previous close of Rs 142.60
The last traded price is Rs 146.20
Incorporated in 1947, Exide Industries has a market cap of Rs 12435.50 crore.
Investment RationaleExide Industries has been taking steps to
narrow the growth gap with its competitor Amara Raja through improvement in service/warranty initiatives, introduction of new products at
competitive prices and changes in incentive schemes for low-end sales executives/dealers
The brokerage says these steps are supporting Exide in sustaining share in the organised segment ( about 60 per cent of the industry) and
gain share from semi-organised/unorganised players ( about 40 per cent of the industry)
Post removal of lockdowns, Exide should witness an earlier recovery in revenue performance, due to a large exposure to replacement
demand.
Also, margins should expand due to a decline in lead prices by 10 per cent quarter on quarter (QoQ)
Overall, the brokerage expect revenue growth of 6 per cent CAGR and EBITDA growth of 8 per cent CAGR over FY20-22E
FinancialsFor the quarter ended December 31, 2019, the company reported consolidated sales of Rs 3553.64 crore, down -5.95 per cent from
last quarter sales of Rs 3778.51 crore and up 8.56 per cent from last year's same quarter sales of Rs 3273.40 crore
The company reported net profit after tax of Rs 118.15 crore in the latest quarter.
