Exide, at Rs 215, is a good buy

Exide, at Rs 215, is a good buy

By Rajiv Kapoor | 29 July, 2017
Exide Industries Limited, submarine batteries, UPS, Shin Kobe

Exide Industries Limited is the country’s largest manufacturer of batteries and power storage solutions provider. It has risen from a small emergency light battery manufacturer to huge submarine batteries. The brand enjoys a nationwide respect and recall. The company’s nine factories are strategically located all over India, of which seven factories are dedicated to batteries, while two factories manufacture home UPS systems. The company manufactures a wide range of batteries for the automotive, power, telecom, infrastructure projects, computer industries, railways, mining, renewable energy and the defence sectors. Exide Industries consistently remain at the forefront of international battery technology, with the help of its collaborators—Shin Kobe and Furukawa of Japan, East Penn of the US and Ecoult of Australia. It has introduced various best-in-class products and power storage solutions for domestic and global markets. Sales of automotive batteries for four and two wheelers have registered a double digit growth in volume in 2016-2017, as compared to the previous year. In spite of the competitive market conditions, the company continues to remain the preferred supplier to most of the vehicle manufacturers in the country. It has become the preferred choice for most of the original equipment manufacturers in the UPS segment, because of superior product performance, excellent after-sales service and cordial relationship with the customers. The company’s advanced products have received great response from telecom customers and the products have been found to be superior in performance and have made significant inroads in establishing itself as a preferred vendor in the telecom segment. The solar division has registered a robust growth and the company has now forayed in offering complete packages for the home usage of the customers. The company has growth opportunities in the industrial and automotive division, especially energy storage, solar, telecom, e-rickshaw and commercial vehicle divisions. It also has an advantage of having a strong brand value, large network, widely spread product range, strong partners and collaborators relationship.

The company achieved a turnover of Rs 23,763.60 million for the 1st quarter of the FY 2017-18, as against Rs 22,649.20 million in the corresponding quarter of the previous year. During the quarter, net profit stood at Rs 1,890.00 million from Rs 1,960.50 million in the corresponding quarter ending of the previous year. Reported earnings per share of the company stood at Rs 2.22 in Q1 FY18 as against Rs 2.31 in the corresponding quarter of the previous year. Profit before interest, depreciation and tax stood at Rs 3,374.80 million as against Rs 3,292.40 million in the corresponding period of the previous year. As the overall economic growth outlook of the country has improved with the Goods and Services Tax implementation, it is expected that this will facilitate the industry to grow at a faster rate in the medium to long term. The Exide stock, currently quoting at Rs 215, is a good portfolio buy, with both traders and analysts expecting the stock to appreciate by 18% in six months.

Rajiv Kapoor is a share broker, certified mutual fund expert and MDRT insurance agent.


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