Buy Exide Ind; tgt Rs 88: Emkay
Published on Saturday, August 2nd, 2008 at 5:25 PMAuthor: admin (5507 Articles)
Exide, India’s largest storage battery manufacturer reported robust performance during first quarter ended June 2008. Its top line grew by 33.8% YoY to Rs 11349.7 mn during Q1FY09. The company witnessed high volume and realization growth on the back of strong demand from Industrial and replacement segments during the quarter. It should be noted that a substantial part of the growth in revenues is also price driven indicating the bargaining and the branding power that Exide has with its
customers.
In Q1FY09, Exide reported EBDITA growth of 15.6% YoY to Rs 1522.5 mn compared to Rs 1316.9 mn in corresponding quarter last year. However, Exide EBITDA margin fell by 320 basis points to 16.5% mainly on account of surge in the raw material prices. Since the company imports its important raw material ‘Lead’, a depreciating rupee has affected the profitability of the company. The consumption of raw materials also includes net exchange loss of Rs 46.1 mn as against net exchange gain of Rs 83.8 mn in the corresponding previous quarter. The consumption of raw material has increased by 660 bps to 68.2% of net sales net of stock adjustments as compared to 61.6% in the corresponding period last year. On the other hand, the employee costs and other expenditures witnessed a steep fall of 160 bps to 4.4% of net sales and 170 bps to 10.9% of net sales respectively. With the burgeoning inflation rates, the company has to keep a very tight control on costs over the next three quarters to keep the momentum of the first quarter going. While sales to automobile manufacturers and Industrial segments are linked to raw material price increase on LME, prices in replacement segment are market driven. Exide is a market leader in the after market sales segment and thus was able to successfully pass on the raw material price increases.
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