BoA ML is expecting sales to grow by 13.8 percent in FY15e, 18 percent in FY16e and 17 percent in FY17e.
Bank of America Merrill Lynch has raised target price of Exide Industries to Rs 183, implying 9 percent upside, driven by a 4 percent upgrade in EPS for FY15e and FY16e and assumption of a higher price to equity ratio. Shares of Exide surged 8 percent, touching 3-year high at Rs 170 intraday on Tuesday.
The battery manufacturer surpassed street expectations on every parameter with the first quarter (April-June) net profit rising by 16 percent on yearly basis to Rs 185 crore. Revenue surged 17.5 percent to Rs 1,912.4 crore in June quarter compared to Rs 1,627.5 crore in corresponding quarter of last fiscal.
BoA ML is expecting sales to grow by 13.8 percent in FY15e, 18 percent in FY16e and 17 percent in FY17e.
Apart from a recovery in demand for inverters owing to an increase in power shortages, the company also saw strong growth in demand from the infrastructure sector for the second consecutive quarter. Automotive battery sales in the replacement market grew about 8 percent and stronger growth in this segment may come from FY16e onward.
The brokerage feels that recovery in Exide's EBITDA is encouraging but the pace is bit slow. "An increase in capacity utilisation in the automotive battery segment would drive further margin expansion. We are now expecting EBITDA margin to be 14.8 percent in FY15e, 15.8 percent in FY16e and 16.4 percent in FY17e," it says in a research note.
At 14:04 hrs Exide Industries was quoting at Rs 166.35, up Rs 8.45, or 5.35 percent on the BSE.
Posted by Nasrin Sultana
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