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MOSL: EXIDE INDUSTRIES (Buy)-Op. performance above estimates- Mr. Chatterjee re-appointed as MD & CEO for two more years

Exide Industries: Op. performance above estimates; Mr. Chatterjee re-appointed as MD & CEO for two more years

(EXID IN, Mkt Cap USD2.6b, CMP INR214, TP INR281, 31% Upside, Buy)

• Volume growth in automotive, UPS and solar segment drive revenues: Net sales grew 5.7% YoY (+4.1% QoQ) to INR26b driven by growth in automotive, UPS, solar and infrastructure batteries’ segments. Average spot lead price for 4QFY19 increased 1% QoQ (-11.5% YoY) to INR143/kg. In Apr’19, lead prices declined further by 6% (v/s 4QFY19). 
• Healthy operating performance drives margins: Gross margins remained flat QoQ (+30bp YoY) to 35.1% (v/s est. of 34.8%). This coupled with lower staff cost at 5.7% (v/s est. of 6.3%, -60bp YoY/-90bp QoQ) and lower other expense at 15% (v/s est. of 15.4%, +20bp YoY, -110bp QoQ) led to EBITDA growth of 10.4% YoY (+19.4% QoQ) to INR3.7b (v/s est. of INR3.5b). This resulted in EBITDA margins of 14.4% (v/s est. of 13%). Other income came in higher at INR166m (v/s est. of INR98m) aiding adjusted PAT growth at 11% YoY (+35.9% QoQ) to INR2.1b (v/s est. of INR1.85b). For FY19, revenue/EBITDA/PAT grew 15.3%/13.7%/10.6%.
• Key managerial appointments: The board re-appointed Mr. Gautam Chatterjee as MD & CEO for two more years, effective 1st May’19. Mr. Subir Chakraborty was appointed as deputy MD for two years, while Mr. Arun Mittal was appointed as Director-Automotive for five years.