Exide Inds

Exide hit is a 3-year high on the back of its exuberant Q1FY15 numbers. Improved sales and higher realizations helped the company clock a 16% (YoY) rise in net profit at Rs.167 crore. Net revenue was up 17% at Rs.1910 crore. Though 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 this improved performance. Re-entry into the telecom sector is also helping.

Raw material cost, which is led by lead is up 10% (YoY), comprises 80% of the total operating cost. And overall cost was up 18%. Thus operating margin came in 90 bps lower at 15.2% though the higher sales and realization helped the company end the quarter with an operating profit at Rs.291 crore, up 11%. 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.