ICICI Direct recommended hold rating on Exide Industries with a target price of Rs 180 in its research report dated November 18, 2020.
ICICI Direct's research report on Exide Industries
Exide Industries reported a steady Q2FY21 performance. Net standalone sales in Q2FY21 were at Rs 2,753 crore (up 5.5% YoY). The topline growth was driven by healthy replacement demand in the automotive and UPS segment with OEM and institutional demand gaining traction during the latter part of the quarter. EBITDA in Q2FY21 was at Rs 392 crore with corresponding EBITDA margins at 14.2%. The margin performance was steady amid RM costs that were at 65% of sales, partly mitigated by savings in other expenses. Consequent standalone PAT came in at Rs 229 crore.
Sales, PAT are seen growing at 4.7%, flattish CAGR in FY20-23E respectively. We believe the stock is near fair value at the CMP. Hence, we downgrade the stock from BUY to HOLD valuing it at Rs 180 (SOTP basis), (battery business at Rs 148 i.e. ~15x P/E on average of FY22E & FY23E EPS; Rs 32 for insurance business & smelting operations).
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