EXIDE INDUSTRIES LTD

Result Update: Q4 FY13

BUY
Stock Data

CMP Target Price

142.00 155.00 APRIL 30th, 2013

ISIN: INE302A01020

SYNOPSIS
Exide Industries Ltd manufactures the widest range of storage batteries in the world from 2.5 Ah to 20,400 Ah capacities, covering the broadest spectrum of applications. The Company has posted a net profit after tax of Rs. 1464.60 million for the quarter ended March 31, 2013 as compared to Rs. 1425.10 million for the quarter ended March 31, 2012. Total Income has increased from Rs. 14688.90 million for the quarter ended March 31, 2012 to Rs. 15716.30 million for the quarter ended March 31, 2013. The Company is presently operating in 204 locations and has plans to increase presence in more than 250 cities within next 18 months as per Annual Report 2011-2012. The company has planned a capital outlay of Rs. 2500 million to be spent on capacity augmentation for industrial batteries & modernization for the year 2013-14. The company completed the acquisition 50 per cent stake in ING Vysya Life Insurance, proving its long term commitment to the insurance business.

Sector Auto Equipment BSE Code 500086 Face Value 1.00 52wk. High / Low (Rs.) 166.30/112.90 Volume (2wk. Avg ) 110000 Market Cap ( Rs in mn ) 120700.00 Annual Estimated Results (A*: Actual / E*: Estimated)

Years
Net Sales EBITDA Net Profit EPS

FY13A

FY14E

FY15E

P/E Shareholding Pattern (%)

60768.30 8599.30 5227.80 6.15 23.09

68060.50 9479.32 5796.58 6.82 20.82

74185.94 10531.99 6457.55 7.60 18.69

1 Year Comparative Graph

BSE SENSEX

EXIDE INDUSTRIES LTD

Peer Groups Company Name Exide Industries Ltd Bosch Ltd Motherson Sumi Systems Ltd Tube Investments of India Ltd

CMP (Rs.) 142.00 9000.05 189.30 160.55

Market Cap Rs. in mn. 120700.00 282591.70 111180.60 29971.40

EPS (Rs.) 6.15 305.16 7.75 7.55

P/E (x) Ratio 23.09 29.49 24.40 21.26

P/BV(x) Ratio 3.55 4.97 8.71 2.69

Dividend (%) 150.00 1350.00 225.00 150.00

Investment Highlights Results updates- Q4 FY13, Exide Industries Ltd manufactures the widest range of storage batteries in the world, reported its financial results for the quarter ended 31st MAR, 2013.
Net Sales PAT EPS EBITDA

Months

MAR-13

MAR-12

% Change

15412.00 1464.60 1.72 2348.60

14476.00 1425.10 1.68 2276.40

6.47% 2.77% 2.77% 3.17%

The companys net profit jumps to Rs.1464.60 million against Rs.1425.10 million in the corresponding quarter ending of previous year, an increase of 2.77%. Revenue for the quarter increase 6.47% to Rs.15412.00 million from Rs.14476.00 million, when compared with the prior year period. Reported earnings per share of the company stood at Rs.1.72 a share during the quarter, registering 2.77% increase over previous year period. Profit before interest, depreciation and tax is Rs.2348.60 millions as against Rs.2276.40 millions in the corresponding period of the previous year.

Expenditure :

Rs. Millions Break up of Expenditure Q4 FY13 Cost of Material Consumed Purchase of Stock in Trade Employee Benefit Expenses Depreciation & Amortization Expenses Other Expenses 8824.40 39.00 900.60 287.80 2131.00 Q4 FY12 9945.10 9.80 746.10 272.70 1933.60

Latest Updates Exide Industries Ltd has recommended payment of a final dividend of 60% (Re. 0.60 per share on face value of Re. 1/- per share) for the financial year ended March 31, 2013, Consequently, the total dividend for the year ended March 31, 2013 including the interim dividend of 100% (Re. 1.00 per share on face value of Re. 1/- each) paid during the year amounts to 160% (Rs. 1.60 per share on face value of Re. 1/- each). During the Quarter, under review, following IRDA & other regulatory permissions, the company completed the acquisition 50 per cent stake in ING Vysya Life Insurance, proving its long term commitment to the insurance business. Financial Year 2012-13 The Company has posted a net profit after tax of Rs. 5227.80 million for the year ended March 31, 2013 as compared to Rs. 4611.70 million for the year ended March 31, 2012. Total Income has increased from Rs. 51773.20 million for the year ended March 31, 2012 to Rs. 61472.50 million for the year ended March 31, 2013.

Company Profile
Exide Industries Limited was incorporated as Associated Battery Makers (Eastern) Ltd, on 31st Jan, 1947 under the Companies Act, 1913 to purchase all or any of the assets of the business of manufacturers, buyers and sellers of and dealers in & repairers of electrical and chemical appliances and goods carried on by the Chloride Electric Storage Company (India) Ltd, in India , since 1916 with a view thereto to enter into and carry into effect (either with or without modification) an agreement has prepared & expressed to be made between the Chloride Electric Storage Co (India) Ltd on the one part and the Company of the other part. The name of the Company was changed to Chloride India Ltd on 2nd August, 1972. The name of the Company was again changed to Chloride Industries Ltd. vide fresh Certificate of Incorporation dated 12th October, 1988. The name of the Company was further changed to Exide Industries Ltd. on 25th August, 1995.

The Company manufactures the widest range of storage batteries in the world from 2.5 Ah to 20,400 Ah capacities, covering the broadest spectrum of applications. The Company has six factories strategically located across the country-two in Maharashtra, one in West Bengal, two in Tamil Nadu and one in Haryana. The Companys predecessor carried on their operations as import house from 1916 under name Chloride Electrical Storage Company. Thereafter, the Company started manufacturing storage batteries in the country and has grown to become one of the largest manufacturer and exporter of batteries in the sub-continent. Exide separated from its UK-based parent, Chloride Group Plc., in 1989, after the latter divested its ownership in favour of a group of Indian shareholders. The Company has grown steadily, modernized its manufacturing processes and taken initiatives on the service front.

Business Areas:

Automotive Batteries

In India the company markets the products under Exide, SF, Sonic and Standard Furukawa brands and supplies to all car and two-wheeler manufacturers. In international market sells products under Dynex, Index & Sonic brands. It has distribution network of 4000 outlets, supported by 4 regional offices and 28 branch offices. It also exports batteries to the Middle East, Japan and CIS countries.

Industrial Batteries

It manufactures industrial batteries in a wide range from 2.5 Ah to 20,600 Ah. In India it sells products under Exide, Index, SF, CEIL and Power Safe brands and in international market under CEIL, Chloride and Index brands. Industrial batteries cater mostly to the infrastructure sector such as railways, telecom, power plants, solar cells and other industrial segments including uninterrupted power supply, inverters and traction batteries.

Submarine Batteries

The Company is also engaged in manufacturing of high-end submarine batteries (Type 1, 2 & 3). It is one of the five companies in the world which has capacity to manufacture submarine batteries for Russian and German types. It manufactures two to three submarines.

Subsidiary Companies The Company has four Indian subsidiaries Chloride Metals Ltd Caldyne Automatics Ltd Leadage Alloys India Ltd Chloride International Ltd

Foreign Subsidiaries Chloride Batteries S.E. Asia Pte Ltd, Singapore. Espex Batteries Limited UK. Associated Battery Manufacturers (Ceylon) Limited, SriLanka.

Financial Highlight
Balance sheet as at March 31st, 2012 (A*- Actual, E* -Estimations & Rs. In Millions) FY12 EQUITY AND LIABILITIES: Shareholders Funds: Share Capital Reserves and Surplus Net worth (a) Non-Current Liabilities: Deferred Tax Liabilities [Net] Other Long Term Liabilities Long Term Provisions Long term liabilities (b) Current Liabilities: Trade Payables Other Current Liabilities Short Term Provisions Current Liabilities Total (a+b+c) ASSETS: Non-Current Assets: Fixed Assets (d) Other non-current assets Non Current Investments Long Term Loans and Advances (e) Current Assets: Current Investments Inventories Trade Receivables Cash and Bank Balances Short Term Loans and Advances Other Current Assets (f) Total (d+e+f) 6480.70 9650.10 4023.00 576.70 513.20 44.20 21287.90 40911.40 1807.30 11671.00 5091.90 747.90 482.00 26.90 19827.00 45483.50 1897.67 13421.65 6059.36 904.96 453.08 28.25 22764.96 52159.85 2125.38 15300.68 7155.89 1085.95 430.43 29.66 26127.99 59825.44 9931.90 9931.90 9.00 9065.50 617.10 9691.60 10531.80 10531.80 14.50 14594.00 516.20 15124.70 11111.05 11111.05 17.98 17594.80 671.06 18283.84 11777.71 11777.71 21.58 21025.79 872.38 21919.74 5658.50 2167.20 1481.70 9307.40 40911.40 5604.10 2625.00 1764.70 9993.80 45483.50 5660.14 3123.75 2064.70 10848.59 52159.85 5716.74 3654.79 2374.40 11745.93 59825.44 825.00 41.40 164.50 1030.90 976.50 71.40 205.90 1253.80 1171.80 107.10 247.08 1525.98 1394.44 153.15 289.08 1836.68 850.00 29723.10 30573.10 850.00 33385.90 34235.90 850.00 38935.28 39785.28 850.00 45392.83 46242.83 FY13 FY14E FY15E

Annual Profit & Loss Statement for the period of 2012 to 2015E Value(Rs.in.mn)
Description Net Sales Other Income Total Income Expenditure Operating Profit Interest Gross profit Depreciation Profit Before Tax Tax Net Profit Equity capital Reserves Face value EPS

FY12 12m 51110.20 632.80 51743.00 -44231.50 7511.50 -53.00 7458.50 -1006.80 6451.70 -1840.00 4611.70 850.00 29466.40 1.00 5.43

FY13 12m 60768.30 704.20 61472.50 -52873.20 8599.30 -41.70 8557.60 -1134.80 7422.80 -2195.00 5227.80 850.00 33138.70 1.00 6.15

FY14E 12m 68060.50 767.58 68828.07 -59348.75 9479.32 -43.79 9435.54 -1248.28 8187.26 -2390.68 5796.58 850.00 38935.28 1.00 6.82

FY15E 12m 74185.94 813.63 74999.57 -64467.58 10531.99 -45.54 10486.45 -1365.62 9120.84 -2663.28 6457.55 850.00 45392.83 1.00 7.60

Quarterly Profit & Loss Statement for the period of 30 Sep, 2012 to 30 June, 2013E Value(Rs.in.mn)
Description Net sales Other income Total Income Expenditure Operating profit Interest Gross profit Depreciation Profit Before Tax Tax Net Profit Equity capital Face value EPS

30-Sep-12 3m 15213.60 125.40 15339.00 -13331.40 2007.60 -9.80 1997.80 -281.70 1716.10 -514.00 1202.10 850.00 1.00 1.41

31-Dec-12 3m 14631.60 121.40 14753.00 -12984.80 1768.20 -10.50 1757.70 -289.20 1468.50 -427.60 1040.90 850.00 1.00 1.22

31-Mar-13E 3m 15412.00 304.30 15716.30 -13367.70 2348.60 -7.80 2340.80 -287.80 2053.00 -588.40 1464.60 850.00 1.00 1.72

30-June-13E 3m 16259.66 322.56 16582.22 -14080.87 2501.35 -8.03 2493.32 -296.43 2196.88 -643.69 1553.20 850.00 1.00 1.83

Ratio Analysis Particulars

EPS (Rs.) EBITDA Margin (%) PBT Margin (%) PAT Margin (%) P/E Ratio (x) ROE (%) ROCE (%) EV/EBITDA (x) Book Value (Rs.) P/BV

FY12 5.43 14.70% 12.62% 9.02% 26.17 15.21% 28.10% 15.99 35.67 3.98

FY13 6.15 14.15% 12.21% 8.60% 23.09 15.38% 28.64% 13.95 39.99 3.55

FY14E 6.82 13.93% 12.03% 8.52% 20.82 14.57% 26.96% 12.64 46.81 3.03

FY15E 7.60 14.20% 12.29% 8.70% 18.69 13.96% 25.73% 11.36 54.40 2.61

Charts

Outlook and Conclusion At the current market price of Rs.142.00, the stock P/E ratio is at 20.82 x FY14E and 18.69 x FY15E respectively. Earning per share (EPS) of the company for the earnings for FY14E and FY15E is seen at Rs.6.82 and Rs.7.60 respectively. Net Sales and Operating Profit of the company are expected to grow at a CAGR of 13% and 12% over 2012 to 2015E respectively. On the basis of EV/EBITDA, the stock trades at 12.64 x for FY14E and 11.36 x for FY15E. Price to Book Value of the stock is expected to be at 3.03 x and 2.61 x respectively for FY14E and FY15E. We expect that the company surplus scenario is likely to continue for the next years, will keep its growth story in the coming quarters also. We recommend BUY in this particular scrip with a target price of Rs.155.00 for Medium to Long term investment.

Industry Overview The Indian auto component industry is expected to reach a turnover worth US$ 113 billion by 2020-21 from US$ 43.4 billion in 2011-12, according to a Automotive Component Manufactures Association (ACMA) report titled, 'Auto Component Industry in India: Growing Capabilities & Strengths'. The exports from the industry are expected to grow at a compound annual growth rate (CAGR) of 17 per cent during 2012-21, the ACMA report highlighted. India has emerged as one of the world's most competitive tyre markets due to vast availability of raw material (natural rubber) and ultramodern production facilities. The radial tyre market is expected to reach Rs 393 billion (US$ 7.33 billion) by FY 2015 growing at a CAGR of more than 21 per cent during FY 2011-FY 2015. The automotive plants of global automakers in India rank among the top across the world in terms of their productivity and quality. Top auto multinational companies (MNCs) like Hyundai, Toyota and Suzuki rank their Indian production facilities right on top of their global pecking order. The Indian automobile and auto components industry can be expected to surpass China's growth path by 2021, according to a research report by Espirito Santo Securities.

Market Structure The tyre production in India is anticipated to reach 191 million units by the end of FY 2016, according to a RNCOS research report titled, 'Indian Tyre Industry Forecast to 2015'. The manufacturers are expected to invest huge amount into the industry over the next few years, with a major proportion of this investment directed towards the radial tyre capacity expansion. In addition, with a significant increase in the number of CNG vehicles, the CNG vehicle market is witnessing a strong growth pattern. According to a RNCOS report titled, "India CNG Vehicle Market Analysis", the CNG kit market is expected to reach around INR 30 Billion in FY 2014, growing at a CAGR of around 22 per cent during FY 2011-2014. India: The Global Auto Hub The amount of cumulative foreign direct investment (FDI) inflow into the automobile industry during April 2000 to January 2013 was worth US$ 8,061 million, accounting to 4 per cent of the total FDI inflows (in terms of US$), as per data published by Department of Industrial Policy and Promotion (DIPP), Ministry of Commerce. A delegation of Japanese auto component companies visited Tamil Nadu (TN) to explore investment opportunities and scout for partnerships with Indian auto component makers. The State houses over 300 Japanese companies and these tier 1 companies would need support from tier 2 component makers and other micro, small and medium enterprise (MSME) suppliers. Apollo Tyres plans to expand its reach in Association for South East Asian Nations (ASEAN). The company will set up a subsidiary to explore market opportunities in the region. Honda Cars India Ltd (HCIL) plans to export diesel engine components to Asian and European markets from India. Key Developments and Investments Supportive government policies, positive business environment, availability of reasonably priced talented workforce and stable outlook for the industry has made India a global hub for the international manufacturers to set up their facilities in the country. The auto components manufacturers are also reaping the benefits.

Federal-Mogul has announced the launch of Ferodo commercial-vehicle (CV) brake lining in the Indian market. The product is being manufactured at the company's spanking new plant in Chennai

Alten will set up an automotive testing facility at its labs in Chennai, Tamil Nadu. The facility will help automobile manufacturers in and around Chennai to outsource testing of components such as diesel engines and suspension system

Toyota Kirloskar Auto Parts has commenced production at a new engine and transmission plant for the Etios range of sedans and hatchback cars in India. Production at the new plant involves an investment of about Rs 500 crore (US$ 92.59 million)

Five auto component companies in Chennai-Rane Group, MM Forgings, Super Auto Forge, Natesan Industries and Auto Parts-are setting up a solar power plant in Tamil Nadu. The solar farm, with an installed capacity of seven megawatt (MW), could entail a total investment of Rs 70 crore (US$ 12.96 million)

Volkswagen (VW) India Pvt Ltd has set up a unit to manufacture and package parts of the Vento and Polo for export at its Pune plant. Announcing the inauguration of the parts and components Business Unit, the company said it has invested around Rs 56 crore (US$ 10.37 million) to develop it

Government Initiatives The Government of India plans to introduce fuel-efficiency ratings for automobiles to encourage sale of cars that consume less petrol or diesel, as per Mr. Veerappa Moily, Union Minister for Petroleum and Natural Gas. The Government's electric vehicle (EV) policy calls for a plan worth Rs 23,000 crore (US$ 4.26 billion), to promote the production of electric and hybrid vehicles over the next eight years, and set a sales target of 6 million units by 2020. In a bid to improve safety features of vehicles, the Government has asked automobile manufacturers to develop a gadget which would be similar to the 'black box' installed in planes. The owner would not be able to turn the instrument off or on and the snapshot could be viewed by legal bodies, insurance companies and automakers. Moreover, Mr C P Joshi, Minister of Road Transport and Highways, Government of India, has also asked manufacturers to contemplate on the option of fixing such IT-enabled instrument to improve safety and security of the vehicles. Some of the highlights of the Union Budget 2012-13:

The auto industry is encouraged by 5 years extension of 200 per cent weighted deduction of research and development (R&D) expenditure under Income Tax Act and also introduced the weighted deduction of 150 per cent for expenditure on skills development. These measures will help the industry improve its products and performance

The increase in customs duty on cars and multi-utility vehicles (MUVs) valued above US$ 40,000 from 60 per cent to 75 per cent seems to be a step to encourage local manufacturing, value addition and employment

Also, the concessional import duty on specified parts of hybrid vehicles has been extended to lithium ion batteries and other parts of the hybrid vehicles. This will help the industry to achieve better cost efficiency

Road Ahead The vision of Automotive Mission Plan (AMP - 2006-16) aims India to emerge as the destination of choice in the world for design and manufacture of automobiles and auto components with output reaching a level of US$ 145 billion accounting for more than 10 per cent of the gross domestic product (GDP) and to provide additional employment to 25 million people by 2016. The rapid improvement in infrastructure, huge domestic market, increasing purchasing power, established financial market and stable corporate governance framework have made the country a favorable destination for investment by global majors in the auto industry, as per AMP 2006-16. The Plan aims at doubling the contribution of automotive sector to the GDP with special emphasis on export of small cars, MUVs, two & three wheelers and auto components.

Disclaimer: This document prepared by our research analysts does not constitute an offer or solicitation for the purchase or sale of any financial instrument or as an official confirmation of any transaction. The information contained herein is from publicly available data or other sources believed to be reliable but do not represent that it is accurate or complete and it should not be relied on as such. Firstcall India Equity Advisors Pvt. Ltd. or any of its affiliates shall not be in any way responsible for any loss or damage that may arise to any person from any inadvertent error in the information contained in this report. This document is provide for assistance only and is not intended to be and must not alone be taken as the basis for an investment decision.

Firstcall India Equity Research: Email info@firstcallindia.com C.V.S.L.Kameswari Pharma U. Janaki Rao Capital Goods A.Nagaraju Cement, Reality & Infra, Oil & Gas Ashish.Kushwaha IT, Consumer Durable & Banking Anil Kumar Diversified

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