ICICI Direct recommended hold rating on Exide Industries with a target price of Rs 205 in its research report dated August 06, 2019.
ICICI Direct's research report on Exide Industries
Exide Industries (EIL) reported a healthy Q1FY20 performance. Net sales was at Rs 2,779 crore (flattish YoY) despite weak OEM demand. EBITDA in Q1FY20 was at Rs 408 crore, up 4.3% YoY with corresponding margins at 14.7%, rising 31 bps QoQ. The margin performance was aided by easing raw material costs although higher employee costs restricted the benefit. Consequent PAT for the quarter came in at Rs 224.3 crore, up 6.8% YoY.
Outlook
We upgrade the stock to HOLD. Our SOTP-based target price of Rs 205 factors in conservative valuation of the battery business at Rs 162 i.e. 13x P/E on FY21E EPS of Rs 12.4 and Rs 42 of its stake in insurance business & smelting operations.
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