Exide Inds

The company has posted an exuberant set of numbers in Q1FY15 in the back of improved sales and higher realisations. But this time around, in Q2FY15, the numbers were good but exactly trailblazing. Net sales of the company rose 23% (YoY) at Rs.1761 crore but a 26% jump in operating cost, led by raw material cost, which was mainly lead, rose 60%. This has a huge impact on the overall performance as raw material comprises 83% of total cost and ate away 75% of the net revenue earned. NPM for the quarter fell from 8.3% to 7.15%.

Once again, this time too, demand from automotive and industrial segment remained subdued; it was improvement in automotive replacement battery sale and robust growth in inverter battery sale, for both auto as well as industrial which helped the company post these numbers. Re-entry into the telecom sector is also helping.

In the coming months it is expected that with auto sales expected to gather momentum from second half, profit margins of Exide could get better. It has done well in the replacement sector but it is also equally true that it has been losing market share consistently to Amara Raja. Lead price is a key factor to watch out for. Largely, it is expected that the company will be able to sustain this growth in the coming months. Interestingly, for H1FY15, the company’s net profit was at Rs.311 crore, which is already 64% of entire FY14 net profit of Rs.487. With two more quarters to go, it is likely to surpass FY14 numbers.