Exide Industries

India Infoline News Service | Mumbai |

Exide Industries reported a weak set of results for Q3 FY14 as revenues fell 10.9% yoy and 8.9% qoq, OPM at 10.9% were significantly lower than expectations and net profit at Rs775mn plummeted 25.5% yoy and 34.7% qoq.

CMP Rs103, Target Rs112, Upside 9.0%

Exide Industries reported a weak set of results for Q3 FY14 as revenues fell 10.9% yoy and 8.9% qoq, OPM at 10.9% were significantly lower than expectations and net profit at Rs775mn plummeted 25.5% yoy and 34.7% qoq. This is second consecutive quarter of below estimate performance. We cut our earnings estimates due to lower volume assumptions as we believe it will continue to lose market share. We are also downgrading our rating to Market Performer and revise our target price to 112.

Key takeaways from conference call:
  • While the company has been able to maintain market share in the two-wheeler (72%) and four-wheeler (64%) segments, the replacement market remained saw weak trends. In the OEM segment, while two-wheelers saw flat volumes four-wheelers saw 8% decline. The company also highlighted that they have not let go any business for lower margins.
  • Inverter segment registered a 37% yoy fall in demand as power supply situation improved and weather conditions were unfavorable for demand of inverters. This has translated into a revenue loss of Rs4.5bn. The outlook for inverter business continues to remain weak. However, with flexibility of production the company hopes to increase presence in the telecom segment.
  • Capacity utilization for industrial batteries is significantly low at 63%, while in the two wheelers it was at 76% and for four wheelers it was at 71%. These low levels were the key reason for lower margins.
  • The company has not been able to reduce price premium of its batteries when compared with Amara Raja Batteries as the latter has followed all pricing actions of Exide. The premium currently prevails at 10-15% and Exide wants to bring it down to 5%.
  • The impact of 5-7% price cuts during November 2013 will be fully reflected in Q4 FY14.
  • Other expenses as a percentage of sales increased by 142bps mainly on account of higher advertising spend.
Q3 FY14 results data
(Rs m)
Q3 FY14
Q3 FY13
% yoy
Q2 FY14
% qoq
Net sales
13,039
14,632
(10.9)
14,321
(8.9)
Material costs
(8,486)
(9,836)
(13.7)
(9,374)
(9.5)
Personnel costs
(897)
(855)
4.9
(855)
4.9
Other overheads
(2,231)
(2,295)
(2.8)
(2,079)
7.3
Operating profit
1,426
1,647
(13.4)
2,014
(29.2)
OPM (%)
10.9
11.3
(32) bps
14.1
(312) bps
Depreciation
(317)
(289)
9.5
(313)
1.1
Interest
(4)
(11)
(63.8)
(5)
(19.1)
Other income
49
121
(59.5)
37
34.1
PBT
1,155
1,469
(21.4)
1,732
(33.3)
Tax
(380)
(428)
(11.2)
(546)
(30.5)
Effective tax rate (%)
32.9
29.1
375 bps
31.5
135 bps
Reported PAT
775
1,041
(25.5)
1,186
(34.7)
PAT margin (%)
5.9
7.1
(117) bps
8.3
(234) bps
Ann. EPS (Rs)
3.6
4.9
(25.5)
5.6
(34.7)
Source: Company, India Infoline Research

Cost analysis
BSE 204.55 0.05 (0.02%)
NSE 204.55 0.20 (0.10%)

***Note: This is a NSE Chart

 

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