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