Neutral Exide; target of Rs 340: Motilal Oswal

Motilal Oswal's research report on Exide

Exide (EXID)’s 3QFY24 result was weak due to lower-than-expected revenue growth. Moreover, higher lead prices and lower volumes led to an EBITDA margin decline of 30bp YoY/ QoQ each. We expect the EBITDA margin to improve sequentially in 4QFY24 led by sequentially lower RM prices and better product mix. We tweak our FY24E EPS by ~4% to factor in the weak operating performance, while we maintain our FY25E EPS.

Outlook

The current valuations of ~25x/20x FY24/25E EPS largely reflect the anticipated recoveries in both replacement and industrials demand, and development in its li-ion business. We, hence, downgrade the stock to Neutral with a TP of INR340 (based on 16x FY26E EPS + INR48/share for HDFC Life stake).