Views on Exide Industries results - Angel Broking

Views of Mr. Yaresh Kothari (Research Analyst- Automobile, Angel Broking) on Exide Industries results.

Exide Industries results beats estimates

Exide Industries 4QFY2014 Result Review (CMP: Rs.126/ TP: Under review/ Recommendation: Accumulate)

Exide Industries (EXID) posted strong results for 4QFY2014 beating consensus as well as our estimates by a wide margin. Top-line posted a healthy growth of 4.7% yoy (23.7% qoq) to Rs. 1,613cr as against our expectations of Rs. 1,476cr. We believe that healthy growth in replacement segment and higher off-take in the two-wheelers would have aided the top-line performance during the quarter. EBITDA margins stood at 13.6% (against our expectations of 13%) and recovered sharply from 10.9% in 3QFY2014 aided by improvement in capacity utilization levels and reduction in employee expenditure as a percentage of sales. Raw-material cost as a percentage of sales though surged 175bp qoq thereby restricting further expansion in operating margins. Consequently, operating profit grew 7.1% yoy (53.5% qoq) to Rs. 219cr, ahead of our expectations of Rs. 192cr. Other income during the quarter, however, declined significantly by 67.8% yoy to Rs. 10cr as against our expectations of Rs. 32cr; thereby impacting the bottom-line performance. Nevertheless, bottom-line at Rs. 132cr (down 9.8% yoy) was still ahead of our expectations of Rs. 127cr. At the CMP, the stock is trading at 16.7x FY2016E earnings. We maintain our Accumulate rating on the stock; our target price though is currently under review. We would like to seek more clarity from the management on the drivers of the 4QFY2014 performance.

Source : Equity Bulls

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