Exide Industries Ltd.: Should you invest?

About the company:

• Exide Industries Limited is a public company domiciled in India and is incorporated under the provisions of the Companies Act, 2013. Its shares are listed on three recognized stock exchanges in India. The company is the largest storage battery company in India, offering the widest range of products to the automotive and industrial sectors.
• Founded in 1947, Exide designs, manufactures, markets, and sells the widest range of lead-acid storage batteries in the world from 2.5Ah to 20,600Ah capacity, to cover the broadest spectrum of applications.
• Using the latest technological inputs, they manufacture batteries for the automotive, power, telecom, infrastructure projects, computer industries, as well as the railways, mining, and defense sectors.

Headquarter	Kolkata, India
Sector	Auto Ancillaries – Batteries

Area of Operation:

• Exide has nine factories strategically located all over India out of which 7 factories are dedicated to batteries and the other 2 factories manufacture Home UPS Systems.
• Collaborations with Furukawa of Japan, Oldham of UK, and East Penn Manufacturing of US give Exide a global dimension in manufacturing capability.
• Exide has subsidiaries in the UK, Singapore and Sri Lanka and its exports span 45 countries across six continents in a growing list of overseas customers.
• They have created significant domestic, as well as 50+ countries global presence through their strategically placed distribution network.
• No single customer represents 10% or more of the Company’s total revenue during the year ended March 31, 2021 and March 31, 2020.
• Exports consists of mere 7% of total sales.
• Their 26% of the net turnover comes from the industrial division.

MD & CEO	Subir Chakraborty (1 May 2021–Present)
Chairman	Mr. Bharat Dhirajlal Shah

Board of Committees:

Subsidiaries:

• Chloride Metals Ltd. (CML) (The companies is engaged in the business of running smelting plants having integrated facilities for extracting lead from exhausted batteries and manufacturing and supplying recycled lead and lead alloys)
• Chloride Power Systems & Solutions Ltd. (CPSSL) (it is engaged in the business of high end chargers for industrial use)
• Chloride International Ltd (CIL) (It is engaged in non-conventional energy business)
• Espex Batteiries Ltd (It is engaged in supply of industrial batteries in UK and its neighboring areas)
• Chloride Batteries S.E. Asia Pte Ltd. (CBSEA)
• Associated Battery Manufacturers Ltd (ABML) (ABML is engaged in the manufacture of Lead acid automotive and motorcycle batteries under the law if Srilanka)
• Exide Leclanche Energy Private Ltd.(ELEPL) (Provides technical support for manufacturing of Lithium Ion batteries)
• Exide Life Insurance Company Limited (ELI)

Competitors:

• Amara Raja Batteries Ltd (Market Cap of ₹ 10,200 Cr)

Shareholding pattern:

Industry Overview:

The Indian automobile sector is gradually recovering as the passenger vehicle and two-wheeler
industries registered strong demand, after the easing of lockdown restrictions in FY2020-21. The EV industry is in the middle of one of the biggest revolutions in the Automobile sector. Leading players in this segment are rapidly expanding their presence and trying to capitalize on this opportunity.

In a big boost to battery and EV firms, Finance Minister Nirmala in the Budget 2022 announced the framing of a battery swapping policy to facilitate EV charging stations for automobiles. This move is expected to help battery management companies and boost EV sales with a focus on clean mobility as the government plans to develop special mobility zones for electric vehicles.

Profit and Loss Statement:

Consolidated P&L:

	Mar-16	Mar-17	Mar-18	Mar-19	Mar-20	Mar-21
Revenue from Operations	9,477	11,179	12,808	14,721	14,471	15,297
Expenses	8,289	9,805	11,400	13,159	13,014	13,706
Operating Profit	1,187	1,374	1,408	1,562	1,457	1,591
Profit before tax	992	1,097	1,048	1,249	972	1,074
Net Profit	697	801	691	846	777	810
EPS in Rs	8.20	9.42	8.13	9.95	9.14	9.53

Key Pointers:

1. Expenses of the company majorly include 40% Material cost and 30% Manufacturing cost.
2. Company has a high percentage of manufacturing cost among its peers but the material cost percentage is compartively the best.
3. Due to the Covid pandemic and change in the BS norms in the previous year, the financials of PY Mar-20 substancially falled.
4. Company has reported poor net profit growth of just 4%
5. It has shown a great recovery in the Financial year 20-21.
6. The EPS seems to be on a poor side.

Standalone Balance Sheet:

	Mar-16	Mar-17	Mar-18	Mar-19	Mar-20	Mar-21
Equity Capital	85	85	85	85	85	85
Reserves	4,426	4,879	5,304	5,902	6,211	6,809
Borrowings	103	170	0	0	28	286
Trade Payables	647	664	938	999	927	1,303
Total Liabilities	6,138	6,776	7,397	8,172	8,242	9,629
Fixed Assets	1,265	1,546	1,958	2,297	2,374	2,672
Investments	2,698	2,674	1,969	2,199	2,071	3,059
Other Assets	1,989	2,414	3,236	3,421	3,501	3,698
Cash Equivalents	74	20	87	74	155	91
Loans n Advances	138	112	300	296	193	229
Total Assets	6,138	6,776	7,397	8,172	8,242	9,629

Standalone Cash Flow:

	Mar-16	Mar-17	Mar-18	Mar-19	Mar-20	Mar-21
Cash from Operating Activity	1340	430	517	1004	914	1413
Profit from operations	1030	1096	1223	1424	1379	1381
Inventory	389	-394	-233	-44	-388	-154
Receivables	-51	-19	-321	-133	251	-71
Working capital changes	578	-385	-356	-47	-216	304
Direct taxes	-268	-281	-350	-373	-249	-272
Cash from Investing Activity	-1146	-307	-28	-766	-325	-1277
Fixed assets purchased	-395	-416	-772	-676	-466	-339
Investment Purchases	-1383	-984	-1026	-1148	-1567	-2356
Investment Sold	597	1009	1731	1090	1774	1484
Cash from Financing Activity	-150	-178	-421	-252	-509	-199
Interest Paid	-1	-4	-6	-6	-7	-4
Dividend Paid	-233	-242	-245	-246	-499	-170
Repayment of borrowings	0	0	-170	0	0	0
Net Cash Flow	44	-55	67	-14	80	-62

Financial Ratios:

Stock Price:

1. Current Price	₹ 154.35
2. Market Cap	₹ 13,111 Cr
3. Yearly fluctuation	₹ 152 – 211

Ratios:

	P/E	ROCE	ROE	Op.Margin	Rev Growth
Exide Industries Ltd.	19.26	17.6%	11.69%	10.86%	5.71%
Amara Raja Batteries Ltd.	22.54	22.3%	16.45%	16.83%	4.54%

Key Points:

1. Exide Industries is one of the largest battery manufacturer in India.
2. It has a huge customer base and excellent 50+ foreign country presence.
3. It doesn’t cater to just automobile sector instead have customers around different industries.
4. The Promoters haven’t diluted any of their shares.
5. With the emergence of EV, Exide Indutries is going to play a key role with respect to battery manufacturing.
6. Company has reported a poor net profit growth of just 4%.
7. The P&L Statement clearly shows a sign of recovery in the last recorded PY.
8. Company’s borrowing increased immensly by 920% becuase of increase in the lease liability.
9. There is a rise in the comapny’s investment as it invested in its subsidiaries Exide Leclanche Energy Private Limited & Chloride Metals Limited.
10. It has very instable cash flow and the net inflow in is negative Amara Raja Batteries Ltd seems to give better financial ratios but has a higher P/E than Exide.
11. Company seems to be way undervalued compared to industry valuations.
12. The company’s stock is trading at discount of 27% from its 52 weeks high.
13. In a time where all EV related stocks are trading at a premium Exide Industries is available at a discount.
14. The overall financials seems moderate and undervaled.
15. Tracing the high demand for EV related products and positive public sentiment Exide Industries Ltd seems to be good buy. 

Disclaimer: This shouldn’t be construed as a stock recommendation, investors discretion is advised while investing.

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Team, MyGoalMySip.