Friday, May 8, 2009

Stock Idea: Exide Industries

Exide Industries, India’s largest auto battery manufacturer,a part of the Raheja group, posted a good set of results for the year ended 31/03/09. Consolidated net profit rose 16.50% to Rs.191.49 crore on 14.16% rise in total income to Rs.3,410.74 crore.

Automotive sales for the year crossed 14 million batteries while industrial battery sales crossed 1.3 billion amp hours. The advantage which the company had was that the price of its main raw material – lead, fell drastically within a very short period of time and the rupee also lost its strength almost in tandem. This helped the company post a better performance. The company on its part, undertook some cost cutting, and better inventory management.

FY09 is a landmark year for Exide as it started the delivery of Nano batteries to Tata Motors. The company is using its Shamnagar factory in West Bengal to produce the battery. During the year Company’s capital expenditure was Rs.160 crore. Its debt equity ratio as at 31/3/09 stood at 0.26 : 1.

Supply to OEMs took a beating due to the recession in the automobile sector but it is the replacement market, which helped the companyclock volumes. The company has slowly reduced its dependence on solely the auto sector and today, 35% of its business comes from industrial range of batteries like telecom, power, traction, inverter, UPS etc.
With the auto sector showing signs of revival, the Tata Nano taking off and lowering of its debt equity ratio, Exide seems poised for a good and long run in FY10.

Source: (By S P Tulsian)

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