Exide Industries – Healthy Bottom-Line

We rate Exide Industries a BUY. Headquartered in Kolkata, India, the company was incorporated as Associated Battery Makers in 1947, now known as Exide Industries. Exide 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. It has six factories strategically located across India – two in Maharashtra, one in West Bengal, two in Tamil Nadu and one in Haryana. Acquired stake in various companies through years including Tandon Metals, Lead Age Alloys India, ING Vysya Life Insurance Company and Caldyne Automatics. During Q2 2010, net sales increased by 6% y-o-y to INR9,503 million. PAT stood at INR1,496 million, recording growth of 88% over Q2 2009.

Investment Highlights

Preferred supplier for leading auto companies. Exide enjoys a significant market share in the vehicle OEM segment. It has been identified as a supplier for batteries for Tata Motor’s ‘Nano’. Supplies of upgraded batteries for Tata Motor’s new model Vista has also commenced. It has also been nominated to supply batteries for Toyota’s small car as well as for the new models of Fiat D/200 and D/300. The company received an order for 5000 batteries for the Singapore Taxi market. Entered into technical collaboration with Changxing Noble Power Sourcing, China, for manufacture of Deep Cycling E-bike batteries for electric bicycles and scooters.

Strong foothold in all types of batteries. Due to its better reach and improved product perception, performance of industrial batteries segment has been satisfactory. In the submarine batteries segment, it received an order from the Indian Navy and an order from the Admiralty Ship Yard of Russia for third country exports. Exide continues to maintain its leadership position in India and South Asia.

Global presence. Exide relies on domestic as well as export market for its revenues. It has entered into arrangements with Indian Oil Corporation, Hindustan Petroleum Corporation and Toyota Kirloskar for distribution of its products through their retail outlets. Similar additional linkages are also being explored. This enables it to have a much larger presence across the country including all B and C class towns.

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