Though Exide’s boom in the fourth region of 2018-19 became modest, it exceeded Street expectancies. Analysts were anticipating a decrease in the increase due to the continued slowdown in vehicle sales. Exide’s sales grew 6%, year-on-year (y-o-y), in the fourth sector due to expanded volume increase in all its predominant segments—car, solar, UPS, and ‘other business batteries. Reduced lead expenses—down 20%, yo-y—contributed to Exide’s higher working margins and helped its net profit develop eleven%, y-o-y.
Analysts are becoming increasingly bullish on this counter now because the latest crash in its proportion price has brought its valuations to reasonable degrees. Exide fell 29% simultaneously as the ET Auto-Ancillaries Index fell 21% during the same period. Exide’s share price fell more than the industry index due to its high dependence on the OEM segment in vehicles and two-wheelers. Concerns about the NBFC credit score squeeze and its effect on automobile sales are often chargeable for the enterprise-extensive downturn. Auto income has also been impacted using an upward charge push due to the implementation of BS-VI norms.
While short-term hiccups are anticipated to continue, Exide’s lengthy-term growth story is unbroken. First, the GST-led shift in marketplace proportion from the unorganized to the organized quarter within the replacement marketplace continues to continue. This ought to gain Exide, that market chief, the most.
Second, although OEM sales have suffered, there may be no fall in the call for the replacement battery. In truth, the demand is expected to develop in the coming years because of the sturdy number one income within the past three to 3-four years. Third, Exide will gain from rising possibilities—elevated traction in the sun and electric vehicles will increase batteries’ call. For instance, the wide variety of e-rickshaws plying the roads has markedly accelerated, as have different segments—motors, buses, and many others.—We anticipate seeing a comparable boom.
Analysts’ views
- Sell 2
- Hold 9
- Buy 18
Fourth, margin improvement is likewise predicted to hold in the coming years because the worldwide economic outlook is vulnerable, and the danger of a rally in lead expenses is far-flung.
More importantly, Exide is strengthening its market share in the automobile battery replacement phase. These steps encompass elevated seller assistance, development in the after-income carrier, quicker turnaround in guarantee-related claims, etc. Exide has also been upgrading its era and is coming out with new launches. For example, it expanded its market share in light industrial motors and tractors by introducing a cheaper brand—Dynex.
