MOSL: Exide Industries (Buy) - Above estimates- healthy operating performance drives PAT
Exide Industries: Above estimates; healthy operating performance drives PAT
(EXID IN, Mkt Cap USD3.3b, CMP INR262, TP INR301, 15% Upside, Buy)
- Volume growth in automotive, UPS, inverter, telecom, solar and infra drives revenue: Net sales rose 25.8% YoY to INR24.6b (in-line), driven by growth in automotive, UPS, inverter, telecom, solar and infrastructure batteries. According to our channel checks, EXID took a cumulative price increase of ~2-2.5% in the quarter, which also aided revenue growth. Spot lead price increased 0.6% QoQ (+6.3% YoY) to INR162 per kg. In Apr-18, lead prices grew 7.6% YoY, but were still down 4.8% v/s 4QFY18 average.
- Healthy operating performance drives PAT: EBITDA margin expanded 80bp YoY (+130bp QoQ) to 13.7% (est. of 13%), led by lower RM cost (65.2% of sales v/s est. of 65.6%) and operating leverage benefits. Other income of INR203m came in higher than our estimate of INR158m, leading to adjusted PAT growth of 15.4% YoY (+22.9% QoQ) to INR1.89b, higher than our estimate of INR1.74b.
- FY18 performance: Revenue grew 21.1% to INR91.8b. EBITDA rose 14.6% to INR12.4b, with the margin contracting 80bp to 13.5%. Other income fell 43.8% to INR584m, leading to adj. PAT of INR6.96b (flat YoY). EXID declared a dividend of INR2.4/share (same as in FY17).
- EXID is focusing on cost-control initiatives and technology upgradation to improve profitability.
Exide Industries is engaged in the design, manufacture and sale of automotive batteries, industrial batteries and submarine batteries. Co. supplies batteries to almost all the car and two-wheeler manufacturers in the country. Co. designs and manufactures its industrial batteries in a range from 2.5 Ah to 20,600 Ah in conventional flooded and Valve Regulated Lead Acid (VRLA) design. Industrial batteries are of three types, Conventional lead acid batteries, Valve regulated lead acid batteries and Nickel-Cadmium batteries. Co. manufactures high-end submarine batteries (Type 1, 2 & 3). Two to three submarine batteries are manufactured a year to meet the country's defence requirements.
Motilal Oswal Financial Services Ltd. is a reputed name in Financial Services and Online Trading with group companies providing services such as Private Wealth Management, Retail Broking and Distribution, Institutional Broking, Asset Management, Investment Banking, Private Equity, Commodity Broking, Currency Broking, Principal Strategies & Home Finance.
Motilal Oswal Securities is a group company of Motilal Oswal Financial Service Limited which started as a stock trading company and has blossomed into well diversified firm offering a range of financial products and services. Motilal Oswal has built a reputation as the source for best stock trading company and this has taken a wealth of experience, knowledge and expertise, constantly working in tandem, over the years.
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