CMP 142.00

Target Price 155.00

ISIN: INE302A01020

APRIL 30th

, 2013

EXIDE INDUSTRIES LTD Result Update: Q4 FY13

BUYBUYBUYBUY

Stock Data

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 FY13A FY14E FY15E

Net Sales 60768.30 68060.50 74185.94

EBITDA 8599.30 9479.32 10531.99

Net Profit 5227.80 5796.58 6457.55

EPS 6.15 6.82 7.60

P/E 23.09 20.82 18.69

Shareholding Pattern (%)

1 Year Comparative Graph

BSE SENSEX EXIDE INDUSTRIES LTD

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.

Peer Groups CMP Market Cap EPS P/E (x) P/BV(x) Dividend

Company Name (Rs.) Rs. in mn. (Rs.) Ratio Ratio (%)

Exide Industries Ltd 142.00 120700.00 6.15 23.09 3.55 150.00

Bosch Ltd 9000.05 282591.70 305.16 29.49 4.97 1350.00

Motherson Sumi Systems Ltd 189.30 111180.60 7.75 24.40 8.71 225.00

Tube Investments of India Ltd 160.55 29971.40 7.55 21.26 2.69 150.00

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.

Months MAR-13 MAR-12 % Change

Net Sales 15412.00 14476.00 6.47%

PAT 1464.60 1425.10 2.77%

EPS 1.72 1.68 2.77%

EBITDA 2348.60 2276.40 3.17%

The company’s 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 :

Break up of Expenditure

Rs. Millions

Q4 FY13 Q4 FY12

Cost of Material Consumed 8824.40 9945.10

Purchase of Stock in Trade 39.00 9.80

Employee Benefit Expenses 900.60 746.10

Depreciation & Amortization Expenses

287.80 272.70

Other Expenses 2131.00 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

Company’s 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 FY13 FY14E FY15E

EQUITY AND LIABILITIES:

Shareholders’ Funds:

Share Capital 850.00 850.00 850.00 850.00

Reserves and Surplus 29723.10 33385.90 38935.28 45392.83

Net worth (a) 30573.10 34235.90 39785.28 46242.83

Non-Current Liabilities:

Deferred Tax Liabilities [Net] 825.00 976.50 1171.80 1394.44

Other Long Term Liabilities 41.40 71.40 107.10 153.15

Long Term Provisions 164.50 205.90 247.08 289.08

Long term liabilities (b) 1030.90 1253.80 1525.98 1836.68

Current Liabilities:

Trade Payables 5658.50 5604.10 5660.14 5716.74

Other Current Liabilities 2167.20 2625.00 3123.75 3654.79

Short Term Provisions 1481.70 1764.70 2064.70 2374.40

Current Liabilities © 9307.40 9993.80 10848.59 11745.93

Total (a+b+c) 40911.40 45483.50 52159.85 59825.44

ASSETS:

Non-Current Assets:

Fixed Assets 9931.90 10531.80 11111.05 11777.71

(d) 9931.90 10531.80 11111.05 11777.71

Other non-current assets 9.00 14.50 17.98 21.58

Non Current Investments 9065.50 14594.00 17594.80 21025.79

Long Term Loans and Advances 617.10 516.20 671.06 872.38

(e) 9691.60 15124.70 18283.84 21919.74

Current Assets:

Current Investments 6480.70 1807.30 1897.67 2125.38

Inventories 9650.10 11671.00 13421.65 15300.68

Trade Receivables 4023.00 5091.90 6059.36 7155.89

Cash and Bank Balances 576.70 747.90 904.96 1085.95

Short Term Loans and Advances 513.20 482.00 453.08 430.43

Other Current Assets 44.20 26.90 28.25 29.66

(f) 21287.90 19827.00 22764.96 26127.99

Total (d+e+f) 40911.40 45483.50 52159.85 59825.44

Annual Profit & Loss Statement for the period of 2012 to 2015E

Value(Rs.in.mn) FY12 FY13 FY14E FY15E

Description 12m 12m 12m 12m

Net Sales 51110.20 60768.30 68060.50 74185.94

Other Income 632.80 704.20 767.58 813.63

Total Income 51743.00 61472.50 68828.07 74999.57

Expenditure -44231.50 -52873.20 -59348.75 -64467.58

Operating Profit 7511.50 8599.30 9479.32 10531.99

Interest -53.00 -41.70 -43.79 -45.54

Gross profit 7458.50 8557.60 9435.54 10486.45

Depreciation -1006.80 -1134.80 -1248.28 -1365.62

Profit Before Tax 6451.70 7422.80 8187.26 9120.84

Tax -1840.00 -2195.00 -2390.68 -2663.28

Net Profit 4611.70 5227.80 5796.58 6457.55

Equity capital 850.00 850.00 850.00 850.00

Reserves 29466.40 33138.70 38935.28 45392.83

Face value 1.00 1.00 1.00 1.00

EPS 5.43 6.15 6.82 7.60

Quarterly Profit & Loss Statement for the period of 30 Sep, 2012 to 30 June, 2013E

Value(Rs.in.mn) 30-Sep-12 31-Dec-12 31-Mar-13E 30-June-13E

Description 3m 3m 3m 3m

Net sales 15213.60 14631.60 15412.00 16259.66

Other income 125.40 121.40 304.30 322.56

Total Income 15339.00 14753.00 15716.30 16582.22

Expenditure -13331.40 -12984.80 -13367.70 -14080.87

Operating profit 2007.60 1768.20 2348.60 2501.35

Interest -9.80 -10.50 -7.80 -8.03

Gross profit 1997.80 1757.70 2340.80 2493.32

Depreciation -281.70 -289.20 -287.80 -296.43

Profit Before Tax 1716.10 1468.50 2053.00 2196.88

Tax -514.00 -427.60 -588.40 -643.69

Net Profit 1202.10 1040.90 1464.60 1553.20

Equity capital 850.00 850.00 850.00 850.00

Face value 1.00 1.00 1.00 1.00

EPS 1.41 1.22 1.72 1.83

Ratio Analysis

Particulars FY12 FY13 FY14E FY15E

EPS (Rs.) 5.43 6.15 6.82 7.60

EBITDA Margin (%) 14.70% 14.15% 13.93% 14.20%

PBT Margin (%) 12.62% 12.21% 12.03% 12.29%

PAT Margin (%) 9.02% 8.60% 8.52% 8.70%

P/E Ratio (x) 26.17 23.09 20.82 18.69

ROE (%) 15.21% 15.38% 14.57% 13.96%

ROCE (%) 28.10% 28.64% 26.96% 25.73%

EV/EBITDA (x) 15.99 13.95 12.64 11.36

Book Value (Rs.) 35.67 39.99 46.81 54.40

P/BV 3.98 3.55 3.03 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 it’s 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

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