Exide Industries (Q2 FY13)

India Infoline News Service | Mumbai |

Exide Industries (Q2 FY13)

CMP Rs143, Target Rs142, Downside 0.7%

  • Net sales for Q2 FY13 were reported at Rs15.2bn, implying a decline of 2.1% on a sequential basis. While the OEM demand remained subdued the volumes were supported by the strong replacement demand observed through the quarter. The performance in the UPS segment was seen to be robust and the management informs of further capacity addition in this segment through a new plant at Haridwar in Uttarakhand. 
  • OPM at 12.4%, much below ours and street expectations, contracted by a disappointing 261bps sequentially over the previous quarter. The underperformance was mainly led by rise in material costs and higher overheads.  Besides the poor operational performance, the sequential decline in PAT was further augmented by lower than expected other income (-15% qoq) and higher depreciation expenses (+2% qoq). Resultantly PAT for the quarter at Rs1.2bn was far below the estimates (-17%) and saw a contraction of 20.9% qoq.
  • Notably the weak results looked better on yoy comparison as the Q2 FY12 was particularly a bad quarter owing to capacity constraints which the company faced and was forced to prefer the low margin OE business over replacement market. 
     
  • The quarter results did not meet the management guidance regarding margin expansion and we believe the replacement market dynamics will be the major determinant for the margins ahead.  Additionally we expect the UPS demand to soften going ahead on back of onset of the winter season. We moderate our estimates and expect the company to report 14.8% revenue CAGR over FY12-14. On the margin front, we foresee 83bps and 85bps expansion in OPM for FY13 and FY14 respectively.
  • We value standalone business at 15x FY14E EPS, and add to it Rs12 for 50% stake in ING Vysya and Rs8 for its subsidiaries. We maintain our recommendation of Market Performer and price target of Rs142 for the consolidated entity.
Result table
(Rs m) Q2 FY13 Q2 FY12 % yoy Q1 FY13 % qoq
Net sales 15,214 11,727 29.7 15,536 (2.1)
Material costs (10,071) (8,342) 20.7 (10,114) (0.4)
Personnel costs (897) (644) 39.3 (841) 6.7
Other overheads (2,364) (1,841) 28.4 (2,254) 4.9
Operating profit 1,882 900 109.1 2,328 (19.1)
OPM (%) 12.4 7.7 469 bps 15.0 (261) bps
Depreciation (282) (247) 14.2 (276) 2.0
Interest (10) (15) (32.4) (14) (27.9)
Other income 125 79 58.9 147 (14.9)
PBT 1,716 718 139.0 2,185 (21.5)
Tax (514) (207) 148.3 (665) (22.7)
Effective tax rate (%) 30.0 28.8 112 bps 30.4 (48) bps
Reported PAT 1,202 511 135.2 1,520 (20.9)
Adj. PAT margin (%) 7.9 4.4 354 bps 9.8 (188) bps
Ann. EPS (Rs) 5.7 2.4 135.2 7.2 (20.9)
Source: Company, India Infoline Research

Cost analysis
As a % of net sales Q2 FY13 Q2 FY12 bps yoy Q1 FY13 bps qoq
Material costs 66.2 71.1 (494) 65.1 109
Personnel Costs 5.9 5.5 40 5.4 49
Other overheads 15.5 15.7 (16) 14.5 103
Total costs 87.6 92.3 (469) 85.0 261
Source: Company, India Infoline Research

Financial Summary
Y/e 31 Mar (Rs m) FY11 FY12 FY13E FY14E
Revenues 45,473 51,070 61,480 67,374
yoy growth (%) 19.9 12.3 20.4 9.6
Operating profit 8,786 6,839 8,747 10,162
OPM (%) 19.3 13.4 14.2 15.1
Pre-exceptional PAT 6,194 4,612 5,849 6,934
Reported PAT 6,663 4,612
BSE 204.25 [0.30] ([0.15]%)
NSE 204.15 [0.40] ([0.20]%)

***Note: This is a NSE Chart

 

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