EXIDE INDUSTRIES LTD - Q2 FY18

Exide Industries Ltd reported mixed second quarter results on 25th October 2017 hit by rising lead prices and exceptional expenditure. Revenue or Income From Operations was on a strong footing rising 9% YOY at Rs. 23713 Mn in the current quarter against Rs. 21709 Mn same period previous year. Profit After Tax declined 25% YOY at Rs. 1355 Mn against Rs. 1818 Mn corresponding quarter previous year with sequential de-growth of 28% in the current September quarter. EBDITA was reported at Rs. 3098 Mn against Rs. 3123 Mn in the same period previous year witnessing mild decline of 1% YOY. Operating Expenditure jumped 10% YOY from Rs. 18818 Mn in Q2 FY17 to Rs. 20754 Mn in the current September quarter. On quarterly basis, operating expenditure jumped just 1% in Q2 FY18. EBDITA margin fell 132 basis points YOY and was reported at 13.06% as rising lead prices took its toll. Net Profit Margin too declined impacted by higher operating cost, depreciation & finance costs in the current September quarter. Net Profit Margin was reported at 5.71% against 8.37% same period previous quarter. Other Income declined 40% YOY and was reported at Rs. 139 Mn compared to Rs. 231 Mn corresponding quarter previous year. On quarterly basis there was a rise of 5% in Q2 FY18.

Exide Industries yearly number are under pressure impacted by higher lead prices coupled with rise in depreciation which rose 18% & interest costs jumped 4 times YOY. In addition to that exception item of Rs. 418.30 Mn in the current quarter represents settlement of dispute with Exide technologies Ltd with respect to usage of the name or mark “EXIDE”. The company is seeing strong volume growth in Automotive & Motorcycles. Apart from that growth in UPS, Telecom & other infrastructure segments was also encouraging in second quarter FY18. As rising lead prices is a major concern area for the company, the company is focusing on technology up-gradation and cost control to improve its bottom-line in the coming quarters. We recommend BUY for the stock for medium & long term investment with PE multiple of 22.26 x FY18E & 20.55 x FY19E at CMP of 202.30. P/BV is seen at 3.10 x FY18E & 2.85 x FY19E with a target price of Rs. 265.

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