Exide Industries Ltd. is a one of the leading producers of leadacid storage batteries for both automotive and industrial applications globally. Exide designs, manufactures, markets and sells the widest range of lead acid storage batteries in the world from 2.5Ah to 20,600Ah capacity, to cover the broadest spectrum of applications. Using the latest technological inputs, it manufactures batteries for the automotive, power, telecom, infrastructure projects, computer industries, as well as the railways, mining and defence sectors. Exide has nine factories strategically located all over India out of which 7 factories are dedicated to batteries and the other 2 factories manufacture Home UPS Systems. 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. Exide has subsidiaries in the UK, Singapore and Sri Lanka and its export s span 45 countries across six continents in a growing list of overseas customers. Exide is one of the few batterymanufacturers who are capable of manufacturing submarine batteries for a wide range of submarine designs, such as Russian (Foxtrot/ Romeo/ Kilo/ 636/Amur class), German (209 class), French (Scorpene class) and Indigenous (Nuclear powered) design submarines.
With extensive presence across geographies, the company has strong brand value, large network, widely spread product range, strong partners and collaborators relationship.
With the revival in demand scenario, cost saving initiatives, strong distribution network, more focus on profitable segment, new product launches and technical collaborations; Exide is well placed to ride on the next wave of growth. The insurance business is also doing well. We believe the company is trading at an attractive valuation at 20.75xand 17.93x of standalone FY17EPS of Rs.8.35 and FY18EPS of Rs.9.66. We initiate a ‘BUY’ on the stock with a target price of Rs.215 (appreciation of about 24%) with the medium to long term investment horizon.
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