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Exide Industries – India Moves on Exide Jul 29 2016 06:34 PM

Exide Industries Limited is a

leading Indian manufacturer of

lead acid storage batteries and

is engaged in the business of

manufacturing storage

batteries from 2.5 ampere-

hours to 20,400 ampere-hour

capacities. The products made

by the Company include

automotive batteries, industrial

batteries, and submarine

batteries. The Company sells its products under SONIC, EXIDE, SF and Standard

Furukawa Brands.

Exide is one of the Top 500 Shares, identified by Dynamic Research based on technical

and fundamental research.

Exide share price has touched a 52 week high of Rs. 184.45 on 14 -Jul -2016 and a 52

week low of Rs.116.00 on 29 -Jan -2016, and is currently trading at Rs. 177.

Shareholding

The promoters holding in the company stood at 45.99%, FII’s have reduced their position

from 16.91% in Jun 2015 to 5.24 % in Jun2016, while DII’s have increased their position

from 15.70% in Jun 2015 to 30.24% in Jun 2016.

Together FII and DII holding in the company stood at 35.48%.Large institutional holding

indicates the confidence of investors in the stock.

Some of the Non Promoters holding securities more than 1% of total number of shares are:

Hathway Investments Limited: 4.32%

Nalanda India Equity Fund Limited: 3.56%

Government pension fund global: 2.04%

HDFC standard life insurance: 1.50%

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Financial Analysis

Quarterly Results:

For the quarter ended June 2016, the total income from operations of Exide Industries has

reported a growth of 14.17 % on the q-o-q basis to Rs. 2011.07 cr as against Rs. 1761.38 cr

during the last quarter. A boost in total income from operations shows strong development

in business.

The operating profit of Exide Industries on standalone has shown a growth of 19.24% q-o-q

to Rs. 265.86 cr as against Rs. 222.96 cr during the last quarter, This is mainly due to rise

in sales of Exide Industries

The net profit of Exide Industries has registered a growth of 10.41% q-o-q to Rs.196.05 cr

as against Rs 177.55 during the previous quarter.

Annual Results:

For the year ended March 31, 2016, Exide Industries on Consolidated basis reported net

sales of Rs. 9528.64 cr as compared to Rs. 9568.48 cr FY2015 declined by 0.41% YOY.

For the year ended March 31, 2016, Exide Industries on Consolidated basis reported net

profit of Rs. 713.70 cr compared to the profit of Rs. 614.55 cr FY2015, registering a growth

of 16.13% annually.

Ratio Analysis:

Name Ratio

Current Ratio 2.19

Quick Ratio 1.63

Dividend Yield% 1.33

Interest Coverage Ratio 721.33

Debt Equity Ratio 0.03

Return On Asset (%) 11.65

Return On Equity (%) 16.67

The above ratio suggests that the company is operating at a very minimal level of debt on it

shoulders, and have enough liquidity to pay its short-term obligation and can quickly meet

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up with the interest expenses pertaining to its debt obligations. The company has generated

decent profit on money invested by the equity shareholders.

Manufacturing Capacities

Exide has nine factories spread across India. Together, they can produce around 34.2

million units of automobile batteries (including batteries for motorcycle applications)

annually, and over 2,824 million ampere-hours of industrial power every year.

Investment Rationale

India is well positioned to supply to domestic demand while leveraging export

opportunities. The rise in India’s working-age population is likely to help motivate the

growing market for private vehicles. Increasing affordability, growing prosperity, and

easier accessibility to finance are expected to impact the four-wheelers market positively.

Yet, two-wheelers will remain the preferred choice for a large section of people.

Furthermore, predictions of a better monsoon will enhance the demand for tractors in

rural India.

Exide Industries is the No. 1 storage battery Company in India

Exide has wide battery storage range from 2.5Ah to 20,000Ah

The company has a global presence in more than 40 countries, with 12 regional offices in

India

The company is implementing a large scale Cast-On-Strap (COS) line at Hosur, which

will be manufacturing large-size batteries in FY 2016-17, enabling faster turnaround and

output. At their Haldia plant, the company has commenced operations of another COS

line for much larger batteries (traction cells).

Exide has implemented Double Orifice Paster (DOP) at the Hosur Plant for VRLA

batteries for product quality consistently.

Exide is one of the first few companies to enter into the E-Rickshaw battery segment,

enjoying the first-mover advantage. They have launched batteries in 88Ah, 100Ah and

115Ah in Flat Plate and 100Ah in Tubular plate with six months and 12 months warranty,

respectively. E-Ride Red range has been launched at a lower price to compete with local

brands. The company is working on E-Rickshaw charging station kiosks, which will be

launched shortly.

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Exide Industries will be investing Rs 1,400 crore over the next two years, of which Rs 700

crore will be at Haldia in West Bengal to introduce high-performance automotive batteries

with new-age punch-grid technology. This venture would help Exide Industries to produce

next generation high-performance long-life batteries. The batteries life would improve by

about 20 percent. The balance Rs 700 crore CapEx will be invested across the other four

automotive battery manufacturing plants in 2017-18. This plan outlay will help Exide

strengthen its market leadership across product segments.

Investment Opinion

The company is in its fourth successive year of profits. At CMP of Rs.178, the stock is

trading at a P/E of 22.67. As per Dynamic Levels, we recommend a buy on this stock at

correction at around 170 levels which is a good weekly support (3 weeks low) for the

stock, with a price target of Rs. 205. The recommended entry price is below current

market price, as 170 is important weekly support and to keep a good Risk to Reward

ratio.

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Disclaimer The investment advice or guidance provided by way of recommendations, reports or other ways are solely the personal views of the research team. Users are advised to use the data for the purpose of information and rely on their own judgment while making investment decision. Dynamic Equities Pvt. Ltd - SEBI Investment Advisory Reg. No.: INA300002022 Disclosure Dynamic Equities Pvt. Ltd. is a member of NSE, BSE, MCX SX and a DP with NSDL & CDSL. It is also engaged in Investment Advisory Services and Portfolio Management Services. Dynamic Commodities Pvt. Ltd., associate company, is a member of MCX & NCDEX. We declare that our activities were neither suspended nor we have defaulted with any stock exchange authority with whom we are registered. SEBI, Exchanges and Depositories have conducted the routine inspection and based on their observations have issued advise letters or levied minor penalty on for certain operational deviations. Answers to the Best of our knowledge and belief of Dynamic/ its Associates/ Research Analyst: DYNAMIC/its Associates/ Research Analyst/ his Relative:

Do not have any financial interest / any actual/beneficial ownership in the subject company.

Do not have any other material conflict of interest at the time of publication of the

research report

Have not received any compensation from the subject company in the past twelve months

Have not managed or co-managed public offering of securities for the subject company.

Have not received any compensation for brokerage services or any products / services

or any compensation or other benefits from the subject company, nor engaged in market making activity for the subject company

Have not served as an officer, director or employee of the subject company