Exide Industries Ltd is a leader in storage battery business with a 60% market share in India. The company enjoys top of the mind brand recall where batteries are concerned, as it offers a battery for every type of vehicle on Indian roads. The company products are applicable in the automotive, power, telecom, infrastructure projects and computer industries as well as railway, defence and mining sectors. Most of the international automobile companies in the country prefer Exide batteries as the initial choice. The company has nine factories strategically located all over India, out of which seven facilities are dedicated to batteries while the other two factories manufacture home UPS systems. Apart from various subsidiaries in the UK, Singapore and Sri Lanka, Exide Industries has collaboration with leading global players like Shin Kobe and Furukawa of Japan, Oldham of UK and East Penn Manufacturing of the US. Exide Life Insurance is a subsidiary of the parent Exide Industries and current valuations are being compared with other listed insurance companies on the stock market. A major capital expenditure of over Rs 1,400 crore has been undertaken by the company, wherein a sum of Rs 700 crore is being invested at the Haldia plant in West Bengal to manufacture high performance automotive batteries, while the balance amount is going to be spent on the existing facilities for technology upgrade and other factors. Battery major Exide Industries has posted a 17% rise in net profit at Rs 181 crore for the second quarter ended 30 September 2016 as against a figure of Rs 155 crore for the same period of previous fiscal. Its net sales went up by over 10% to Rs 2,175 crore as against Rs 1,965 crore for the same period of last fiscal. From a financial perspective, the company enjoys a complete debt free status and a steady dividend stream over the last many years. Two major triggers over the next 12-18 months could be the demerger of its insurance business and a liberal stock bonus issue, creating solid benefits to shareholders. With benefits of expansion and technology upgrade scheduled to happen in the next year or so, many auto analysts tracking the company expect the EPS to be around Rs 15 per share. So on a PE of 20, the Exide stock can climb to Rs 280 on the Indian stock exchanges. The stock currently quoting at Rs 195 can be bought by portfolio investors for a 12-month investment perspective for over 40% price appreciation.
With a mix set of numbers emerging from the ongoing second quarter earning , the sudden developments in the Tata group companies made the stock market indices swing wildly . Let’s all hope that better sense prevails and the spat between the sacked Chairman Mr Mistry and the Tata Sons Board issue gets resolved in a smooth amicable manner and Tata Group shareholder wealth is not destroyed . Going forward the US elections and the US Fed rate hike are crucial things for the markets direction . In the short term the markets are expected to behave in a volatile mode and react to stock specific news . We wish Sunday Guardian readers a Bright and Prosperous Samvat 2073 and good appreciation in their stock portfolio.
Rajiv Kapoor is a share broker, certified mutual fund expert and MDRT insurance agent.