High Conviction Idea - Buy Exide Industries Ltd For Target Rs.229 - Religare Broking
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High Conviction Idea - Exide Industries Ltd.
Exide Industries (Exide) reported healthy revenue growth of 16% YoY, however, margins contracted mainly due to higher input prices. The revenue growth was largely volume-driven in both the automotive and industrial verticals. However, margins missed our estimate as it contracted by 379bps YoY at 10.2% due to higher raw material cost which resulted in EBITDA decline of 15.4% YoY. Adjusted PAT declined by 7.8% YoY to Rs. 225 cr.
We believe the worse of margin pressure is behind us and expect improvement, which would be led by mix of price hikes, better sales mix, and cost optimization measures. The demand outlook continues to remain healthy for Exide led by overall economic recovery, pick up in auto volumes, and increased traction in the replacement market. Therefore, we maintain a Buy rating on the stock with a target price of Rs. 229.
Buy Exide Industries Ltd For CMP 146.25 Recommendation 149 Price Target 229 Duration 9-12 Months
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