India Equity Research Automobiles December 18, 2020
EXIDE INDUSTRIES
COMPANY UPDATE
KEY DATA Rating BUY Demand energising, margins charging up Sector relative Outperformer Price (INR) 193 12 month price target (INR) 220 We hosted top management of Exide Industries (Exide) for investor Market cap (INR bn/USD bn) 164/2.2 meetings. Takeaways: i) Sales growth has picked up across the board Free float/Foreign ownership (%) 54.0/9.1 What’s Changed from Q3FY21, and Exide has closed gap with competition; it is targeting Target Price Rating/Risk Rating ⚊ a 200bps lead over market. ii) While lead prices are headed up in the near term, Exide is targeting 150bps in EBITDA margin expansion to INVESTMENT METRICS 295 15% over the next 1.5 years led by cost levers. iii) Presence in lithium 230 ion is fortified with 1.5GWh capacity on stream and an order bagged. 165 100 In light of Exide’s improving OEM sales, margin focus, progress on 35 -30 lithium-ion JV (investment of INR1.9bn), and no further investments in Sales Growth EPS Growth RoE PE (%) (%) (%) (x) the insurance arm, we are raising the valuation to 21x and rolling it Automobiles EXID IN Equity over to June-22E, yielding revised TP of INR220. Retain ‘BUY’.
FINANCIALS (INR mn) Recovery in sales charging up well Year to March FY20A FY21E FY22E FY23E Exides’s sales grew slower than competition over the last three quarters owing to Revenue 98,567 89,137 1,01,737 1,09,297 late operationalisation of its plants. They will fully recover in H2FY21 led by full EBITDA 13,650 11,517 13,535 14,363 Adjusted profit 8,400 6,149 7,613 7,913 operationalisation of all plants and an all-round pickup. Besides, the spate of Diluted EPS (INR) 9.9 7.2 9.0 9.3 initiatives such as market mapping, digitalisation, and transformation of the sales EPS growth (%) 10.3 (26.8) 23.8 3.9 structure should, according to management, help it outgrow the market by 200bps. RoAE (%) 13.4 9.4 10.9 10.5 P/E (x) 19.4 26.5 21.4 20.6 Putting energy in margin improvement and capital allocation EV/EBITDA (x) 11.8 13.3 11.6 10.8 With its EBITDA margin lagging competition by 300bps, Exide targets to bridge the Dividend yield (%) 2.1 0.8 1.3 1.3 gap by at least 150bps without compromising capital allocation. A transforming supply chain, power cost reduction through solar, higher automation at factories and PRICE PERFORMANCE warranty management would help Exide improve EBITDA margin to 15%+ in 1.5–2
225 47,000 years, up from 13–14% in the last four years. Capex in FY21 will be merely INR3bn. 205 42,600 185 38,200 Progressing well on lithium ion with 1.5 GWh capacity 165 33,800 145 29,400 With in-built flexibility on all types of lines at its lithium ion plant, the prismatic line 125 25,000 has been commissioned and the first bulk order (INR180mn) has been received from Dec-19 Mar-20 Jun-20 Sep-20 an electric 3W OE. The cylindrical line will be ready soon and prototypes for electric EXID IN Equity Sensex 2W have begun. Management expects INR10bn in sales on ramp-up over four years.
Outlook and valuation: Firmer trajectory; retain ‘BUY’ Explore: The company’s present endeavours are likely to bear fruit over the next two–three years, setting the stage for Exide to outperform market growth. We estimate a revenue CAGR of 11% from FY21–23E. Efforts on margin improvement should result in higher EBITDA margin, thereby leading to cash accretion, with limited spends on capex (FY21 to be INR3bn). Replacement volumes in FY22 are likely to be in line with Financial model Po dcast the peak of FY20, while investments in the Li-ion JV should begin to yield dividends.
All in all, we are raising FY22E EPS by 5% and estimate an EPS CAGR of 12% from FY21–23E. Maintain ‘BUY’ with a revised SoTP-based TP of INR220 (earlier: INR202), valuing the standalone business at 21x Jun 22 EPS (10% discount versus 15% earlier Corporate access Video to AMRJ’S target multiple) and the life insurance business at 1x embedded value.
Shradha Sheth Meera Midha +91 (22) 6623 3308 +91 (22) 4088 5804 [email protected] [email protected]
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EXIDE INDUSTRIES
Financial Statements
Income Statement (INR mn) Balance Sheet (INR mn) Year to March FY20A FY21E FY22E FY23E Year to March FY20A FY21E FY22E FY23E Total operating income 98,567 89,137 1,01,737 1,09,297 Share capital 850 850 850 850 Gross profit 30,547 26,476 29,537 31,406 Reserves 62,111 66,731 71,794 77,156 Employee costs 6,664 6,397 6,813 7,256 Shareholders funds 62,961 67,581 72,644 78,006 Other expenses 10,233 8,561 9,189 9,787 Minority interest 0 0 0 0 EBITDA 13,650 11,517 13,535 14,363 Borrowings 280 280 280 280 Depreciation 3,626 3,715 3,933 4,309 Trade payables 10,303 9,280 11,149 11,978 Less: Interest expense 94 140 100 90 Other liabs & prov 8,152 5,443 5,613 5,613 Add: Other income 639 559 675 615 Total liabilities 82,420 83,307 90,409 96,600 Profit before tax 10,352 8,221 10,178 10,579 Net block 23,372 23,157 25,724 28,915 Prov for tax 2,097 2,072 2,565 2,666 Intangible assets 365 365 365 365 Less: Other adjustment 0 0 0 0 Capital WIP 2,969 2,969 2,969 2,969 Reported profit 8,256 6,149 7,613 7,913 Total fixed assets 26,705 26,490 29,057 32,249 Less: Excp.item (net) (144) 0 0 0 Non current inv 20,521 20,521 20,521 20,521 Adjusted profit 8,400 6,149 7,613 7,913 Cash/cash equivalent 1,733 9,452 5,556 8,101 Diluted shares o/s 850 850 850 850 Sundry debtors 8,153 7,082 9,756 10,181 Adjusted diluted EPS 10 7 9 9 Loans & advances 322 291 332 357 DPS (INR) 4.1 1.5 2.5 2.5 Other assets 24,986 19,471 25,188 25,193 Tax rate (%) 20.3 25.2 25.2 25.2 Total assets 82,420 83,307 90,409 96,600
Important Ratios (%) Free Cash Flow (INR mn) Year to March FY20A FY21E FY22E FY23E Year to March FY20A FY21E FY22E FY23E Automotive (% of rev.) 71.7 71.0 71.4 70.8 Reported profit 8,256 6,149 7,613 7,913 Industrials (% of rev.) 27.3 28.0 27.6 28.2 Add: Depreciation 3,626 3,715 3,933 4,309 Gross margin (%) 31.0 29.7 29.0 28.7 Interest (net of tax) 63 94 67 60 EBITDA margin (%) 13.8 12.9 13.3 13.1 Others (653) (94) (67) (60) Net profit margin (%) 8.5 6.9 7.5 7.2 Less: Changes in WC (2,155) 2,884 (6,392) 373 Revenue growth (% YoY) (6.9) (9.6) 14.1 7.4 Operating cash flow 9,136 12,749 5,154 12,595 EBITDA growth (% YoY) (3.3) (15.6) 17.5 6.1 Less: Capex 4,660 3,500 6,500 7,500 Adj. profit growth (%) 10.3 (26.8) 23.8 3.9 Free cash flow 4,477 9,249 (1,346) 5,095
Assumptions (%) Key Ratios Year to March FY20A FY21E FY22E FY23E Year to March FY20A FY21E FY22E FY23E GDP (YoY %) 5.0 (6.5) 7.5 6.0 RoE (%) 13.4 9.4 10.9 10.5 Repo rate (%) 4.4 4.0 3.8 4.0 RoCE (%) 17.3 12.8 14.6 14.1 USD/INR (average) 70.9 75.0 73.0 72.0 Inventory days 107 112 98 103 4W OEM (mn units) 11.8 10.6 2.2 2.5 Receivable days 35 31 30 33 4W Aftermkt (mn units) 27.3 28.0 10.1 9.8 Payable days 58 57 52 54 2W OEM (mn units) 12.2 12.4 9.3 10.6 Working cap (% sales) 16.3 14.7 19.2 17.5 2W Aftermkt (mn units) 9.7 10.2 9.4 10.0 Gross debt/equity (x) 0.4 0.4 0.4 0.4 Home Inverter (% YoY) (7.0) (17.0) 15.0 16.0 Net debt/equity (x) (2.3) (13.6) (7.3) (10.0) UPS (% YoY) 5.0 (8.0) 14.0 10.0 Interest coverage (x) 106.6 55.7 96.0 111.7
Valuation Metrics Valuation Drivers Year to March FY20A FY21E FY22E FY23E Year to March FY20A FY21E FY22E FY23E Diluted P/E (x) 19.4 26.5 21.4 20.6 EPS growth (%) 10.3 (26.8) 23.8 3.9 Price/BV (x) 2.6 2.4 2.2 2.1 RoE (%) 13.4 9.4 10.9 10.5 EV/EBITDA (x) 11.8 13.3 11.6 10.8 EBITDA growth (%) (3.3) (15.6) 17.5 6.1 Dividend yield (%) 2.1 0.8 1.3 1.3 Payout ratio (%) 42.2 20.7 27.9 26.9
Source: Company and Edelweiss estimates
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EXIDE INDUSTRIES
Key takeaways Sales transformation: Digital mapping/structure transformation
Exide Industries boasts market leadership in batteries across segments in automotive (except exports) and industrial (except telecom), logging a 10.8% CAGR over the last five years.
While the company logged strong sales growth over FY17–19 beating competition, sales growth has lagged peers over the last six quarters. Sales were also hit over the last three quarters led by the late operationalisation of its plants in Maharashtra.
Sales will fully scale up in Q3 and Q4FY21 led by full operationalisation of all plants and an all-round pickup. Furthermore, management expects sales to grow 200bps ahead of market led by the following initiatives. With market mapping, digitalisation of sales and structure transformation, the company has been able to improve sales growth.
The market mapping exercise undertaken over the last one year helped it identify 5,000 consumption centres spanning 23 regions, versus 13 earlier. More than 100,000 retail partners were thus mapped.
Digitalisation efforts: The company took a massive digitalisation initiative, thereby putting more than 4,000 channel partners (dealers) and 500 sales personnel on cloud. The company also digitalised its service efforts, leading to reduced lead times to dealers from three–four days to barely about four hours and now offers a doorstep service to customers, which can be booked digitally/online. These efforts have reinforced dealer confidence in the network and should yield results over the next 9–12 months.
Sales picking up: Sales have lagged led by the covid-19 hit over the past three quarters and late operationalisation of its three plants in Maharashtra. That said, sales would fully scale up in Q3 and Q4FY21 led by full operationalisation of all plants and an all-round pickup.
Telecom: Exide ceded market share in the telecom segment, intentionally reducing sales in the wake of weak pricing and higher competition. However, the company regained its market share to 30% over the last quarter with segmental sales having doubled.
Furthermore, with a key customer, BSNL, having paid outstanding dues in last 12 months, and now going into fresh tendering, management believes the overall telecom market for batteries will start growing.
Recovery is expected to drive FY22 replacement revenues to the FY20 levels.
Focus on export market: Exports currently make up less than 10%. So, the company is targeting to double exports over the next three years led by growth in both the automotive and industrials divisions.
Exide has been lagging competition in the automotive market in exports. Consequently, management is focusing on South East Asian and Middle Eastern markets and plans to localise sales force across the two geographies. An office has already been set up in the UAE, with plans underway for an office in Malaysia to aid on-ground support. The company has also made inroads into the difficult US markets, having bagged a one-year contract.
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EXIDE INDUSTRIES
Exide remains the market leader in industrial exports, with exports forming 13% of industrial sales. Management aims to grow this to more than 15% in FY22, with expansion in two key segments – traction batteries and medium VRLA batteries. The company has seen strong demand from export markets, particularly Europe for its traction batteries (used in forklifts and material handling equipment), with e-commerce finding favour post-lockdowns.
Muted growth in auto OEM sales for the last two years, and it would hit the replacement market from FY23. However, based on all the above initiatives, Exide targets 200bps higher sales growth than the market.
Within the replacement market, the company expects to gain share from the small-scale sector. Of the replacement battery market, small-scale batteries form 35-40%, which mainly includes players within 3W, CV and tractor operators. Given low credit and tightened supply chains during and post-lockdowns, unorganised players have undergone significant stress. This could become an area of high-growth for the company aiding in market share expansion as well. Cost leadership and margin levers
Exide lags the competition on margins by 300bps. Hence, the company has identified margin levers and plans to reduce costs by 150bps over the next 12–18 months, and achieve margins of 15–16% over FY22–FY23E (13–14% in FY20–21). This will be driven by:
Supply chain and logistics management: Supply chain costs are ~3% of top line. The company is looking at transforming its supply chain with digitalisation and overhead optimisation. It aims to rationalise 156 depots (to 90 depots in phase I) and to 50 depots in phase 2 over the next one year.
Power costs: Power and fuel costs formed 3.3% of turnover, 4.2% of costs in FY20. Exide has commissioned a solar power plant each in south and west India, with a third plant underway in north India. The company is looking at power reduction through solar with 66MW capacity.
Packaging costs: The company has identified savings by procuring plastic packaging materials, which should drive cost down.
Manpower costs: The efforts on manpower rationalisation and automation are underway, especially with the installation of punch grid technology machines with continuous lines instead of patch power processing, which has improved efficiency by 50%. However, given the operating model, Exide is likely to have a higher manpower cost vis-à-vis its peer set.
Warranties: Due to its presence in higher warranty products such as 3W and home UPS, Exide’s warranty costs are 0.7% higher than peers; however, management has undertaken efforts to mitigate leakages in the system and also scaling up lower-end brand Dynex in tier-2 and -3 cities, which offers lower warranty.
Raw material price increase and volatility: While lead prices have been inching up, as per management, they raised prices by 1.5% in September. Furthermore, Exide has a mix of raw materials with pure lead constituting 40% of raw material costs (sourced from Hindustan Zinc) and recycled lead constituting the balance, which is 5–6% cheaper than pure lead and not linked to LME. Thereby, they are increasing consumption of recycled lead.
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EXIDE INDUSTRIES
Lead prices on an upward trajectory
3,000
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Source: Bloomberg, Edelweiss Research Technology tie-ups The company’s growth has largely been focused on technological collaborations. The following collaborations are underway or planned over the medium to long-term: 1. Hitachi Chemicals Co., Japan: Exide formed a partnership with Hitachi, Japan in 1990s for a range of advanced high-power automotive batteries as well as VRLA industrial range of products.
2. Furukawa Battery Company, Japan: Exide has a technical assistance and collaboration agreement with Furukawa for various automotive applications spanning both 2Ws and 4Ws. The entire range is being upgraded to comply with BSVI emission norms. The company is also developing Ultra batteries in collaboration with Furukawa.
3. EastPenn Manufacturing, USA: The company collaborated with EastPenn for automotive and industrial batteries. Exide has recently developed the industrial ultra battery for energy storage application, which is ready for commercial deployment. The company is also developing Ultra batteries in collaboration with EastPenn.
4. Moura Batteries, Brazil: With stricter energy norms and more stringent measures likely to be enforced, there is likely to be higher demand for more sophisticated car batteries. In anticipation of the same, Exide collaborated with Moura, to develop advanced automotive batteries required for BSVI compliant vehicles.
5. Leclanché, Switzerland: Exide entered into a JV with an 80% share for lithium ion (Li ion) batteries. The JV is has a production scale of 1.5GWh with six production lines ordered for the battery pack assembly for cylindrical, prismatic and pouch cells.
6. E-Coult, Australia: Exide collaborated with E-Coult for Battery Management Systems (BMS) and energy storage solutions based on the ultra-battery technology. These are heavier batteries, which are voluminous, and can replace stationary batteries wherever possible.
7. Advanced Battery Concepts, USA: Exide is the fourth company globally that, in collaboration with ABC, has licensed bi-polar batteries, which should change the
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EXIDE INDUSTRIES
archaic perception around lead acid batteries. These batteries could also reduce lead requirement by about 40%, resulting in lower costs.
Summary of Exide's technological collaborations
Source: Company, Edelweiss Research Lithium ion JV: Progressing well Taking a lead in India’s nascent lithium-ion battery market, Exide formed a JV with Leclanche of Switzerland, which is now progressing well. Capacity of 1.5GWh with six production lines has come on stream for battery pack assembly. Exide’s investment in the JV has gone up from INR410mn in FY19 to INR1.9bn in FY20, for an 80% stake. Going forward, the company plans to spend INR0.8–1bn annually in the JV. The company is concentrating on value-addition on module making and Battery Management Systems (BMS)—and not cell manufacturing at present—as it gives them the flexibility to take on the market the way it develops.
The company has concentrated on engineering expertise and hired 32 Engineers from Bosch for contract-based designing.
Exide collaborated with E-Coult for Battery Management Systems (BMS) and energy storage solutions based on the ultra-battery technology.
The capacity is used for both automotive and industrial applications such as Telecom, UPS, and energy storage.
Exide has built in maximum flexibility at its lithium ion factory, having capacities for all types of modules: cylindrical, prismatic, and pouch form.
Prismatic capacity has been fully commissioned and validated this month. The first bulk order has been received for 3,000 battery packs for an electric 3W from a large OEM player for INR180mn. This line will be also used for making e-bus and telecom modules.
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EXIDE INDUSTRIES
Prismatic line status
Source: Company, Edelweiss Research
Cylindrical line installation will be completed by 30th December. This line will be used for making battery modules for electric 2Ws. Prototypes are under testing with 2W OEMs.
Cylindrical line status
Source: Company, Edelweiss Research
The Pouch module line has been developed by Leclanche, its Swiss partner. This line is used for making battery modules for bus/car applications. Homologation for bus orders for 10,000km battery packs is undertaken.
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EXIDE INDUSTRIES
Pouch module line status
Source: Company, Edelweiss Research
The JV has set up an R&D centre in Bengaluru where several product development programmes are underway. Many pilot orders have been collected from multiple automotive OEMs, as well as large telecom operators, UPS manufacturers and solar PV companies.
Furthermore, the modules produced by the lines are assembled into low voltage or high voltage packs.
Low Voltage Pack Line: This has been commissioned and ready for production. The line will be used for making modules into packs for all low-voltage applications such as 2W, 3W, Telecom and UPS.
High Voltage Pack Line: This line has been commissioned and is ready for production. HV line to be used for making high-voltage packs for bus/car and other high voltage applications.
According to management, the company can generate INR10bn on full-scale utilisation in sales in this lithium ion capacity. They are expecting 60–70% utilization in three years.
Exide management reckons cell manufacturing makes economic sense at 5GW, wherein the investment is USD800mn. EV penetration
Management believes penetration of EVs will be slower in PVs and faster in 2W, buses and 3W. Management believes two broad concerns plague EVs at present: high initial cost and lack of charging infrastructure.
2W and 3W electrification: Management expects 10% of 2W universe to be EV by 2025 and 25% of universe to be EV by 2030. While costs are broadly 2x of a traditional engine vehicle at present in 2W (INR1.25lac versus INR55,000 for a comparable ICE engine battery requirement), with improvement in scale and efforts on cost reduction, initial cost to customer is likely to reduce over the medium to long-term. Furthermore, the lower cost of maintenance and power costs vis-à-vis fuel costs make a compelling argument for intra-city transfer in
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EXIDE INDUSTRIES
small vehicles. Within 2W, 3W Exide is looking at designing the cells and providing after sales and warranty as well.
For buses and cars, intra-city travel is likely to be a major driver for PVs with charging infrastructure available at depots and homes for consumers. However, PVs are likely to see lower adoption owing to distance anxiety among customers without necessary infrastructure in place.
4W: Within 4Ws, Exide is planning to tie up with smaller OEMs for assembly of cells for their EV requirements. Owing to the current geopolitical scenario, OEMs are looking at diversifying away from Chinese suppliers. Large 4W OEMs are likely to pursue their own designing and manufacturing. Given the present geo- political climate, management sees lower dependence on China for battery pack imports than planned earlier by OEMs and may undertake contract manufacturing for smaller OEMs, without taking additional warranty risk.
Consequently, management estimates 2W and 3W EV usage to be at 10–25% of the market by 2030, while the shift in buses will be contingent on government subsidies. Four wheeler passenger vehicles will see slower shift depending on charging infrastructure in the country.
Furthermore, battery life in 2W and 3W EVs and e-rickshaws is likely to be two–three years, presenting a strong replacement market, while PVs are likely to have a longer battery life. With technology ready for 2W, 3W, buses, Telecom and UPS, Exide plans to increase its presence in these categories. Capex and capital allocation
Capital allocation: With INR10bn of post-tax cash generated each year, the company has decided on an average 30% dividend payout every year. Further, the company had liquid cash of INR12.8bn as on Q2FY21.
Capex: In FY21, Exide will look at just the spillover capex of INR2.5–3bn. Going forward, the company will look at restarting capex and 15–20% capacity expansion, it will be mainly brownfield capex. The company annually guided for INR0.8-1bn of capex for lithium ion capacities. Life Insurance business The company had made investments of INR16.8bn as of FY20 (last incremental investment of INR1bn in October-18) in the Exide Life insurance business, and no further capital infusion is likely in the business.
While growth remains a paramount concern, the company has expanded at a 13% CAGR in sales over the last four years. Furthermore, the solvency ratios are comfortable at 210%. The business currently has an embedded value of ~INR25.4bn with a notable presence in South, and some expansion underway in North, East and Western markets. While Exide Life lacks a large banking partner for distribution, it has several co-op banks as distribution partners. The renewal business continues to grow post-lockdown.
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EXIDE INDUSTRIES
We assign a revised TP of INR220 based on SoTP Valuation Value/Share Particulars Remarks methodology (INR) Standalone Earning Core standalone business valued at 21x 190 operations multiple Jun 22E earnings Embedded Assigning 1x embedded value as on 31st Exide Life Insurance value 30 March, 2020 multiple Target Price 220 Source: Company, Edelweiss Research
We have increased our FY22E EPS by 5%
Old New % Change
FY21E FY22E FY21E FY22E FY21E FY22E Revenue 88,023 1,00,580 89,137 1,01,737 1.3 1.2 EBITDA 11,379 13,208 11,517 13,535 1.2 2.5 PAT 5,996 7,266 6,149 7,613 2.6 4.8 Source: Edelweiss Research
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EXIDE INDUSTRIES
Company Description Exide is a leading battery producer in India and one of the largest power storage producers in South Asia. It supplies batteries to the automotive, industrial, infrastructure development, information technology and defence sectors in India. It has six battery manufacturing facilities located across India. In addition, through its subsidiaries, the company has two lead smeltering facilities that supply a significant amount of the company's lead requirement. The company is servicing 8 mn customers via all different types of batteries. Current capacity in 4W, 2W and industrial batteries is at 12.2mn units, 22mn units and 2.5mn amph, respectively. The company recently increased its stake in ING Vysya Life Insurance Company (IVL) to 100%. IVL began its operations in 2001 and currently services more than 1mn customers. Further Exide ventured in lithium ion pack assembly and battery management systems with 1.5 GW capacity which was commissioned in Dec 20. Investment Theme Company is well poised to cater to the replacement demand within automotives and inverters and telecom segment within industrial batteries. Also company is undertaking technology upgradation and cost cutting initiatives. Given the replacement nature of business, battery volumes may surge in the near term. We expect replacement volumes to touch FY20 peak in FY22.
Our thesis is reinforced by improving OEM sales where Exide is a market leader with 60% plus market share, strong margin focus, with increase by 150bps, taking lead in the lithium ion JV for pack assembly and Battery Management System (BMS) with investments of INR1.9bn, and no further investments planned in the insurance arm. Key Risks Downside risks
If economic slowdown prolongs, not only would it affect OEM demand but also prolong the replacement cycle, thus affecting the replacement demand. Any increase in competitive activity, which triggers price war, will negatively impact margin.
Upside risks
Lead prices bounced back by 10% QoQ while USD-INR continues to remain volatile. However Exide has pricing power and usually effects price increases with a lag.
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EXIDE INDUSTRIES
Additional Data Management Holdings – Top 10* Chairman Bharat D. Shah % Holding % Holding Vice-Chairman R.B. Raheja ICICI Prudential MF 4.57 ABSL AMC 1.94 Hathway Investment 4.32 Govt Pension Fund 1.91 CEO G. Chatterjee Life Insurance Corp 3.09 HDFC Life 1.73 CFO A.K. Mukherjee HDFC AMC 2.56 DSP Investments 1.50 Auditor B S R & Co New India Assurance 1.97 ICICI Prudential Life 1.28
*Latest public data
Recent Company Research Recent Sector Research Date Title Price Reco Date Name of Co./Sector Title Robust rebound in demand ; Result Commodities spike: Will history 10-Nov-20 202 Buy 16-Dec-20 Automobiles Update repeat? ; Sector Update Covid-19 derails auto OEMs; Result Brexit and beyond…; Company 04-Aug-20 184 Buy 02-Dec-20 Tata Motors Update Update Auto OEMs sore; COVID-19 Festive sales undershoot 06-Jun-20 205 Buy 26-Nov-20 Bajaj Auto exacerbates pain; Result Update expectations ; Company Update
Rating Interpretation Daily Volume TP TP 20 300 284 292 TP 260 265 16
230 12 (INR)
195 (Mn) 8
160 4 125 Dec-17 Jun-18 Dec-18 Jun-19 Dec-19 Jun-20 0 EXID IN Equity Buy Hold Reduce Dec-17 Jun-18 Dec-18 Jun-19 Dec-19 Jun-20
Source: Bloomberg, Edelweiss research Source: Bloomberg
Rating Distribution: Edelweiss Research Coverage Rating Rationale
Buy Hold Reduce Total Rating Expected absolute returns over 12 months
Rating Distribution* 162 63 14 239 Buy: >15%
>50bn >10bn and <50bn <10bn Total Hold: >15% and <-5%
Market Cap (INR) 184 59 4 247 Reduce: <-5% * stocks under review
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EXIDE INDUSTRIES
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Additional Disclaimers
Disclaimer for U.S. Persons This research report is a product of Edelweiss Securities Limited, which is the employer of the research analyst(s) who has prepared the research report. The research analyst(s) preparing the research report is/are resident outside the United States (U.S.) and are not associated persons of any U.S. regulated broker-dealer and therefore the analyst(s) is/are not subject to supervision by a U.S. broker-dealer, and is/are not required to satisfy the regulatory licensing requirements of FINRA or required to otherwise comply with U.S. rules or regulations regarding, among other things, communications with a subject company, public appearances and trading securities held by a research analyst account. This report is intended for distribution by Edelweiss Securities Limited only to "Major Institutional Investors" as defined by Rule 15a-6(b)(4) of the U.S. Securities and Exchange Act, 1934 (the Exchange Act) and interpretations thereof by U.S. Securities and Exchange Commission (SEC) in reliance on Rule 15a 6(a)(2). If the recipient of this report is not a Major Institutional Investor as specified above, then it should not act upon this report and return the same to the sender. Further, this report may not be copied, duplicated and/or transmitted onward to any U.S. person, which is not the Major Institutional Investor. In reliance on the exemption from registration provided by Rule 15a-6 of the Exchange Act and interpretations thereof by the SEC in order to conduct certain business with Major Institutional Investors, Edelweiss Securities Limited has entered into an agreement with a U.S. registered broker-dealer, Edelweiss Financial Services Inc. ("EFSI"). Transactions in securities discussed in this research report should be effected through Edelweiss Financial Services Inc.
Disclaimer for U.K. Persons The contents of this research report have not been approved by an authorised person within the meaning of the Financial Services and Markets Act 2000 ("FSMA").
In the United Kingdom, this research report is being distributed only to and is directed only at (a) persons who have professional experience in matters relating to investments falling within Article 19(5) of the FSMA (Financial Promotion) Order 2005 (the “Order”); (b) persons falling within Article 49(2)(a) to (d) of the Order (including high net worth companies and unincorporated associations); and (c) any other persons to whom it may otherwise lawfully be communicated (all such persons together being referred to as “relevant persons”).
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Disclaimer for Canadian Persons This research report is a product of Edelweiss Securities Limited ("ESL"), which is the employer of the research analysts who have prepared the research report. The research analysts preparing the research report are resident outside the Canada and are not associated persons of any Canadian registered adviser and/or dealer and, therefore, the analysts are not subject to supervision by a Canadian registered adviser and/or dealer, and are not required to satisfy the regulatory licensing requirements of the Ontario Securities Commission, other Canadian provincial securities regulators, the Investment Industry Regulatory Organization of Canada and are not required to otherwise comply with Canadian rules or regulations regarding, among other things, the research analysts' business or relationship with a subject company or trading of securities by a research analyst.
This report is intended for distribution by ESL only to "Permitted Clients" (as defined in National Instrument 31-103 ("NI 31-103")) who are resident in the Province of Ontario, Canada (an "Ontario Permitted Client"). If the recipient of this report is not an Ontario Permitted Client, as specified above, then the recipient should not act upon this report and should return the report to the sender. Further, this report may not be copied, duplicated and/or transmitted onward to any Canadian person.
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Disclaimer for Hong Kong persons This report is distributed in Hong Kong by Edelweiss Securities (Hong Kong) Private Limited (ESHK), a licensed corporation (BOM -874) licensed and regulated by the Hong Kong Securities and Futures Commission (SFC) pursuant to Section 116(1) of the Securities and Futures Ordinance “SFO”. This report is intended for distribution only to “Professional Investors” as defined in Part I of Schedule 1 to SFO. Any investment or investment activity to which this document relates is only available to professional investor and will be engaged only with professional investors.” Nothing here is an offer or solicitation of these securities, products and services in any jurisdiction where their offer or sale is not qualified or exempt from registration. The report also does not constitute a personal recommendation or take into account the particular investment objectives, financial situations, or needs of any individual recipients. The Indian Analyst(s) who compile this report is/are not located in Hong Kong and is/are not licensed to carry on regulated activities in Hong Kong and does not / do not hold themselves out as being able to do so.
Copyright 2009 Edelweiss Research (Edelweiss Securities Ltd). All rights reserved.
Aditya Narain Head of Research [email protected]
14 Edelweiss Research is also available on www.edelweissresearch.com, Bloomberg - EDEL, Thomson Reuters, and Factset Edelweiss Securities Limited