Exide Ind: Buy for ~24% appreciation with medium to long term perspective

Hem Securities | July 15, 2010, midnight

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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