Hold Exide Industries; target of Rs 230: Geojit
Geojit’s research report on Exide Industries
Exide Industries Limited (EIL) is a leader in storage battery business with a market share of 60% in India. Its segment includes automotive and industrial lead acid batteries. Revenue for the Q3FY19 grew by 10%YoY led by strong volume growth across segments in Automobile, Inverter and Industrial batteries. Despite 200bps QoQ (60bpsYoY) improvement in Gross margin due to 8% softening in lead price, EBITDA margin improved by only 20bps. EIL is focussing on cost control initiatives and technological upgradation as strategies to improve bottom line. Newer cost effective brands like Boss/Dynex at competitive price are expected to support market share gain from the unorganized players.
At CMP we value EIL at 15x on FY21EPS and Insurance business at 2xEV (Embedded value) at Rs51 and revised our target price to Rs230 with a rating downgrade to Hold.
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