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Exide - Improved Performece

Wednesday, July 25, 2007

Exide reported an improved performance in the June 2007 quarter helped by the two price hikes made by the company, which enabled it to offset higher raw material costs like lead on a y-o-y basis.

As a result, operating profit grew 64.3 per cent to Rs 131 crore in the last quarter, while net sales expanded 51.4 per cent to Rs 664 crore. Its operating profit margin also expanded 150 basis points y-o-y to 19.7 per cent in Q1 FY08.

Meanwhile, the company’s adjusted raw material costs rose 130 basis points y-o-y to 61.6 per cent in the June 2007 quarter, but hikes in product prices helped it offset rising input costs. In FY07 too, Exide operating profit margin also improved 40 basis points y-o-y to 16.5 per cent.

The company is planning another hike in battery prices, in a bid to offset rising raw material prices. Also, the company has bought a 25 per cent stake in Australia-based Ceil Motive Power and it is expected to help Exide expand in that market.

However, with the stock trading at 27.3 times FY07 earnings (excluding the latest stake acquisition in Australia), it appears expensive despite its stake in ING Vysya Life Insurance, considering that the profitability of the core business depends a lot on how lead prices move.

Posted by FR at 7:58 AM  


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