23 July 2014
Update | Sector: Automobiles
Exide Industries
BSE Sensex
26,147
S&P CNX
7,796
CMP: INR160
TP: INR200
Upgrade to Buy
Stock Info
Bloomberg
Equity Shares (m)
52-Week Range (INR)
1, 6, 12 Rel. Per (%)
M.Cap. (INR b)
M.Cap. (USD b)
Earnings growth back post five-year flat run
EXID IN
850.0
170/99
10/31/-7
136.0
2.3
Expect re-rating to historical levels; upgrade to Buy with 25% upside
Financial Snapshot (INR Million)
Y/E March
2015E 2016E 2017E
Net Sales
69,762 80,575 94,298
EBITDA
Adj PAT
EPS (INR)
Growth (%)
BV/Sh. (INR)
RoE (%)
RoCE (%)
P/E (x)
P/BV (x)
10,596 13,223 15,470
6,421 8,274 9,721
7.6
31.8
49.1
16.2
22.5
21.2
3.3
9.7
28.9
56.5
18.4
25.3
16.4
2.8
11.4
17.5
65.4
18.8
25.8
14.0
2.4
Management indicated improved outlook on both auto and industrial fronts, thus
corroborating with our view based on industry interactions.
We upgraded Exide Industries’ (EXID) FY15E/16E EPS by 11.7%/27% during
1QFY15 preview on improved demand outlook, initial signs of market share gains
in replacement segment and consequent margin expansion on operating leverage.
Expect the stock to re-rate to 18.5x (~10% premium to 10-year average PE of
16.6x) on 25.6% EPS CAGR over FY14-17E (v/s -2% CAGR over FY10-14).
Stock trades at 18.4x/14.2x FY15E/16E EPS (adjusted for INR20 insurance
valuation). Upgrade to Buy with a potential upside of 25%.
Improvement signs in autos, PV bounces back in 1Q, MHCV decline
moderates
Initial signs of demand recovery are visible in autos. PV demand turned positive
in 1QFY15 with 3% growth (13.3% in June 2014), post weak performance for the
last three years. Decline in MHCV has also moderated (closer to flattish) as
economic activity improves and drives a 10-12% increase in freight rates in CY14
YTD. Expect sharp 16% revenue CAGR in autos driven by OEM demand recovery
and share gains in replacement segment (~40% of market is still unorganized).
Channel checks suggest market share rise in replacement segment
Shareholding pattern (%)
As on
Jun-14 Mar-14 Jun-13
Promoter
DII
FII
Others
46.0
19.6
14.9
19.5
46.0
17.2
17.3
19.6
46.0
14.5
17.3
22.2
Our channel checks with dealers indicate that EXID has undertaken major
initiatives, primarily in sales and service process, to gain share in the
replacement segment. Major initiatives are faster service turnaround and
improved focus on smaller but fast growing dealers.
Economic recovery to drive improvement in industrial revenue
Demand for industrial segment, comprising primarily of inverters, telecom, UPS,
railways and infrastructure (power, traction), is highly linked with the economic
activity. With an expected pick-up in macro recovery, we estimate industrial
revenue to post a CAGR of 16.4% over FY14-17E.
Note: FII Includes depository receipts
Stock Performance (1-year)
Exide Inds.
Sensex - Rebased
190
165
140
115
90
Improved demand outlook to drive 15.9% revenue growth
Initial signs of demand recovery are visible in autos, with a sharp pick-up in PV
demand and moderation in MHCV decline in 1QFY15. Demand in industrial
segment is strengthening as the economic activity picks up. Expect revenue to
clock 15.9% CAGR over FY14-17E, driven by 15.8%/16.4% growth in
autos/industrial.
Margins to rise from 13.8% in FY14 to 16.4% in FY17E
Led by healthy revenue growth and benign outlook for lead prices, we expect
EBITDA margin to expand by 260bp over FY14-17E. EXID is working aggressively
on cost reduction measures, which provide upside risk to margins.
Jinesh Gandhi
(Jinesh@MotilalOswal.com); +91 22 3982 5416
Chirag Jain
(Chirag.Jain@MotilalOswal.com); +91 22 3982 5418
Investors are advised to refer through disclosures made at the end of the Research Report.

Exide Industries
Expect stock to re-rate to 18.5x on robust 25.6% EPS CAGR over FY14-
17E
Compared to -2% EPS CAGR over FY10-14, we expect EXID to deliver 25.6% EPS
CAGR over FY14-17E. Our FY15E/16E EPS are 12%/23%, ahead of consensus.
Expect the stock to re-rate to 18.5x (~10% premium to 10-year average PE of
16.6x) as earnings growth momentum returns.
Upgrade to Buy with a target price of INR200, with potential upside of
25%
Adjusted for INR20 for valuation of the insurance business, the stock trades at
18.4x/14.2x FY15E/16E EPS of INR7.6/9.7. We upgrade EXID to a
Buy
with a
target price of INR200 (18.5x FY16E EPS), potential upside of 25%.
Improvement signs in autos; PV demand bounces in 1Q, MHCV decline
moderates
Initial signs of demand recovery are visible in autos
PV demand has bounced back strong in 1QFY15 post weak performance for last
3 years
Decline in MHCVs has also moderated (closer to flattish) as economic activity
improves driving 10-12% increase in freight rates in CY14-YTD
Expect sharp 15% volume CAGR both in PVs and MCHVs over FY14-17E on low
base and acceleration in economic recovery.
MHCV decline moderating; expect 15% CAGR over FY14-17
PV demand picks-up considerably in 1QFY15
Source: Company, MOSL
Source: Company, MOSL
Channel checks suggest share rise in replacement segment
Our channel checks with dealers indicate that Exide has undertaken major initiatives
primarily on the sales and service process to gain share in the replacement segment.
Some of the initiatives have been discussed below:
Sharp
improvement in service turnaround through technological
enhancements:
Significant improvement in service turnaround has been seen to
1-2 days from earlier 8-9 days (key problem area for Exide earlier). All Field Sales
officers (FSOs, roughly ~400 PAN India) has been given an electronic device
called Metronics (costing INR1.5 lac/unit) through which any battery can be
judged for any defects etc immediately. Smaller dealers who previously had
23 July 2014
2

Exide Industries
issues monitoring ordered inventory, now have real time update on the same
due to inventory management software installed on their desktops/laptops.
Specific team to focus on small but high growing dealers:
Separate business
development teams have been created to ensure greater focus on smaller
dealers. Small dealers are estimated to contribute ~25-30% of business and have
started improving on the back of higher engagement with dealers.
Frequent visits of sales team to dealers enabling quicker troubleshooting:
With
the help of technology (GPS monitoring), sales officers are made sure that they
frequently visits dealers and thus remove any difficulties which dealers may
face. All FSOs have been given a tablet through which all activities are being
monitored on daily basis by senior management in terms of no. of dealer visits,
time spend with dealers etc.
Cosmetic product change to enhance brand recall:
A lot of small initiatives have
been taken to make the product more visible on the shelf resulting in better
brand recall. Also products across categories and price points have been
introduced. For example BOSS, which is a entry level product, is competing with
the huge unorganized market and could easily grab a 5% share of unorganized
segment (still ~40% of the market) which will be significant for the company’s
volume growth
Share of unorganized segment high in CVs, tractors
Industrial segment recovery linked to economy recovery
Source: Company, MOSL
Source: Company, MOSL
Economic recovery to drive improvement in industrial revenues
Demand for industrial segment comprising primarily inverters, telecom, UPS,
railways and infrastructure (power, traction) are highly linked with economic
activity
Market share in telecom segment (~currently 17% of industrial revenues) has
improved significantly YoY from 8% to 21% in 1QFY15, with further potential to
touch 30%.
With expected pick-up in macro-recovery, we expect industrial revenues to
grow at a CAGR of 16.4% over FY14-17E
23 July 2014
3

Exide Industries
OEM demand recovery, share gains to drive auto revenues
Power back-up forms the major chunk of industrial revenues
Source: Company, MOSL
Source: Company, MOSL
Improved demand outlook to drive 15.9% revenue growth
Initial signs of demand recovery are visible in autos with sharp pick-up in PV demand
and moderation in MHCV decline in 1QFY15. Demand in industrial segment is
strengthening as economic activity picks-up. Expect revenue growth at 15.9% CAGR
over FY14-17 driven by 15.8%/16.4% growth in autos/industrial.
Expect revenue CAGR of 15.9% over FY14-17E
Autos contribute 60% of revenues
Source: Company, MOSL
Source: Company, MOSL
Margins to rise from 13.8% in FY14 to 16.4% in FY17E
Led by healthy revenue growth and benign outlook for lead prices, we expect
EBITDA margins to expand by 260bp over FY14-17E. EXIDE is working aggressively on
cost reduction measures which provides upside risk to margins.
Outlook for lead prices fairly stable
Margins to expand 260bp to 16.4% over FY14-17E
Source: Company, MOSL
23 July 2014
Source: Company, MOSL
4

Exide Industries
Robust 26% PAT CAGR expected over FY14-17E
FCF to improve significantly over FY14-17E
Source: Company, MOSL
Source: Company, MOSL
Expect stock to re-rate to 18.5x on robust 25.6% EPS CAGR over FY14-17E
Compared to -2% EPS CAGR over FY10-14, we expect EXIDE to deliver 25.6% EPS
CAGR over FY14-17E. Our FY15E/16E EPS are 12%/23% ahead of consensus. Expect
stock to re-rate to 18.5x (~10% premium to 10-year average PE of 16.6x) as earnings
growth momentum comes back.
Return ratios to improve towards historical levels
Expect re-rating to 18.5x on improved earnings outlook
Source: Company, MOSL
Source: Company, MOSL
Upgrade to Buy with TP of INR200 with potential upside of 25%.
Adjusted for INR20 for valuation of insurance business, the stock trades at
18.4x/14.2x FY15E/16E EPS of INR7.6/9.7. Upgrade the stock to Buy with TP of
INR200 (18.5x FY16E EPS) with potential upside of 25%.
23 July 2014
5

Exide Industries
Financials and valuation
Income statement
Y/E March
Net Sales
Change (%)
EBITDA
EBITDA Margin (%)
Depreciation
EBIT
Interest
Other Income
Extraordinary items
PBT
Tax
Tax Rate (%)
Reported PAT
Adjusted PAT
Change (%)
Min. Int. & Assoc. Share
Adj Cons PAT
2012
51,070
12.2
6,839
13.4
1,007
5,832
53
673
0
6,452
1,840
28.5
4,612
4,612
-27.4
0
4,612
2013
60,714
18.9
7,841
12.9
1,135
6,706
42
759
0
7,423
2,195
29.6
5,228
5,228
13.4
0
5,228
2014
59,642
-1.8
8,252
13.8
1,256
6,996
12
246
0
7,230
2,360
32.6
4,870
4,870
-6.8
0
4,870
2015E
69,762
17.0
10,596
15.2
1,435
9,161
20
301
0
9,442
3,021
32.0
6,421
6,421
31.8
0
6,421
(INR Million)
2016E
80,575
15.5
13,223
16.4
1,512
11,710
20
301
0
11,992
3,717
31.0
8,274
8,274
28.9
0
8,274
2017E
94,298
17.0
15,470
16.4
1,662
13,808
20
301
0
14,089
4,368
31.0
9,721
9,721
17.5
0
9,721
Balance sheet
Y/E March
Share Capital
Reserves
Net Worth
Debt
Deferred Tax
Total Capital Employed
Gross Fixed Assets
Less: Acc Depreciation
Net Fixed Assets
Capital WIP
Investments
Current Assets
Inventory
Debtors
Cash & Bank
Loans & Adv, Others
Curr Liabs & Provns
Curr. Liabilities
Provisions
Net Current Assets
Total Assets
2012
850
29,723
30,573
584
825
31,982
17,747
8,081
9,666
319
15,546
15,413
9,681
4,023
577
1,133
8,962
7,316
1,646
6,452
31,982
2013
850
33,386
34,236
71
977
35,284
19,002
9,058
9,944
588
16,401
18,550
11,671
5,092
748
1,040
10,200
8,229
1,971
8,351
35,284
2014
850
36,465
37,315
58
1,051
38,423
20,203
10,314
9,889
600
19,670
19,406
11,856
5,166
1,200
1,185
11,143
9,015
2,129
8,263
38,423
2015E
850
40,896
41,746
58
1,240
43,043
23,953
11,749
12,204
350
19,670
20,967
12,264
5,469
1,688
1,547
10,147
7,395
2,753
10,820
43,043
(INR Million)
2016E
2017E
850
850
47,181
54,715
48,031
55,565
58
58
1,479
1,761
49,568
57,384
26,453
28,953
13,262
14,924
13,192
14,030
350
350
19,670
19,670
27,770
36,550
13,502
15,027
6,095
6,875
6,385
12,558
1,787
2,091
11,412
13,216
8,541
9,996
2,871
3,220
16,357
23,334
49,568
57,384
E: MOSL Estimates
23 July 2014
6

Exide Industries
Financials and valuation
Ratios
Y/E March
Basic (INR)
EPS
Cash EPS
Book Value
DPS
Payout (incl. Div. Tax.)
Valuation(x)
P/E
Cash P/E
Price / Book Value
EV/Sales
EV/EBITDA
Dividend Yield (%)
Profitability Ratios (%)
RoE
RoCE
Turnover Ratios (%)
Asset Turnover (x)
Debtors (No. of Days)
Inventory (No. of Days)
Creditors (No. of Days)
Leverage Ratios (%)
Net Debt/Equity (x)
2012
5.4
6.6
36.0
1.5
32.3
29.5
24.2
4.4
2.7
19.9
0.9
15.9
19.2
1.7
28.8
69.2
43.0
0.0
2013
6.2
7.5
40.3
1.6
30.4
26.0
21.4
4.0
2.2
17.3
1.0
16.1
19.9
1.8
30.6
70.2
38.7
0.0
2014
5.7
7.2
43.9
1.8
36.8
27.9
22.2
3.6
2.3
16.3
1.1
13.6
19.0
1.6
31.6
72.5
46.3
0.0
2015E
7.6
9.2
49.1
2.0
31.0
21.2
17.3
3.3
1.9
12.7
1.2
16.2
22.5
1.7
28.6
64.2
39.7
0.0
2016E
9.7
11.5
56.5
2.0
24.0
16.4
13.9
2.8
-0.1
-0.5
1.2
18.4
25.3
1.7
27.6
61.2
40.3
0.0
2017E
11.4
13.4
65.4
2.2
22.5
14.0
12.0
2.4
-0.1
-0.8
1.4
18.8
25.8
1.8
26.6
58.2
40.3
0.0
Cash flow statement
Y/E March
OP/(Loss) before Tax
Depreciation
Others
Interest
Direct Taxes Paid
(Inc)/Dec in Wkg Cap
CF from Op. Activity
(Inc)/Dec in FA & CWIP
(Pur)/Sale of Invt
Others
CF from Inv. Activity
Inc/(Dec) in Net Worth
Inc / (Dec) in Debt
Interest Paid
Divd Paid (incl Tax)
CF from Fin. Activity
Inc/(Dec) in Cash
Add: Opening Balance
Closing Balance
2012
6,452
1,007
0
-584
-1,842
66
5,101
-1,991
-1,239
0
-3,230
0
-22
-50
-1,371
-1,443
428
147
576
2013
7,423
1,135
0
-663
-1,950
-2,352
3,597
-1,587
-214
0
-1,801
0
0
-47
-1,578
-1,625
171
577
748
2014
6,996
1,256
0
246
-2,286
540
6,752
-1,213
-3,269
0
-4,482
-2
-14
-12
-1,790
-1,817
453
748
1,201
2015E
9,161
1,435
0
301
-2,833
-2,067
5,997
-3,500
0
0
-3,500
0
0
-20
-1,989
-2,009
488
1,200
1,687
(INR Million)
2016E
2017E
11,710
13,808
1,512
1,662
0
0
301
301
-3,478
-4,086
-841
-805
9,206
10,880
-2,500
-2,500
0
0
0
0
-2,500
-2,500
0
0
0
0
-20
-20
-1,989
-2,188
-2,009
-2,208
4,697
6,172
1,688
6,385
6,385
12,558
E: MOSL Estimates
23 July 2014
7

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Exide Industries
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Analyst ownership of the stock
EXIDE INDUSTRIES LTD
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Email : kadambari.balachandran@motilaloswal.com
Contact(+65)68189232
Contact: (+65) 68189233 / 65249115
Office Address:21 (Suite 31),16 Collyer Quay,Singapore 04931
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Motilal Oswal Securities Ltd
23 July 2014
Motilal Oswal Tower, Level 9, Sayani Road, Prabhadevi, Mumbai 400 025
Phone: +91 22 3982 5500 E-mail: reports@motilaloswal.com
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