Published on 10/07/2019 1:46:26 PM | Source: Equirus Securities Ltd

Accumulate Exide Industries Ltd For Target Rs. 231 - Equirus Securities

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Taking innovative initiatives to sustain growth

EXID’s FY19 Annual Report reflects increased efforts to enhance growth in auto and industrial verticals through new product launches, increased distribution and entry into exports market. EXID’s thrust on continuous product innovation within lead acid batteries space and expected launch of lithium-ion solutions by Q3FY20 would address concerns on its readiness pertaining to mobility landscape changes. We believe that healthy growth momentum in auto replacement, industrial and exports segments would help contain weak OEM demand. We maintain “Accumulate” with a price target of Rs231, based on 19xMar’21E standalone EPS plus Rs30 for value of investments. The stock is currently trading at 19.3x FY20E and 18.9x FY21E standalone EPS.


Automotive – New products/services, increased distribution and exports to drive sales

* Auto OEM and aftermarket segment continued to grow strongly with new product launches and increased market presence in FY19.

* Differentiated services like a) its EPIQ range has the longest warranty (72 months) to target high-end cars, b) its CABBY range targets the commercial and metered taxi market, and c) its Gold range offers low-cost 4W batteries – targeted at gaining share from regional players.

* Launch of enhanced flooded battery (for BS6) applications to drive growth.


Industrial – Focus on new segments and exports on the cards

* While key industrial segments like Telecom remained under pressure in FY19, segments such as solar (for applications like micro-grid and utility vehicle storage, inverters etc.) industrial UPS and exports facilitated growth.

* Further new product launches for data warehouse, SOHO (small office, home office applications), large format retailers and compact batteries for telecom helped to sustain growth.


Several small innovations for big industrial play

* EXID has launched several new products for diverse industrial applications. For example, a) Ultra and Tubular GEL– Solar micro grids and utility scale storage, b) High watt series UPS – data warehousing applications, c) compact online UPS – for SOHO and large format retail, d) compact telecom batteries – for Indian and international markets, etc.

* Further, EXID will field test bipolar batteries (requires ~20-30% lower lead than conventional batteries) for auto and industrial applications.



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