Buy Exide Inds.; target of Rs 204: Geojit BNP Paribas

Q1FY17 revenue grew 11% YoY to Rs2011cr, which is above our estimate of Rs1900cr. The surge in sales was due to improvement in demand from OEMs and Non Auto sales. The inverter battery segment which constitutes 25% of sales has shown growth in this quarter. The growth in 4W & 2W replacement battery was muted. Raw material cost contracted by 354bps YoY to 62.5% in Q1FY17 due 12%YoY fall in lead price. PAT increased 26%YoY to Rs196cr led by operational performance and increase in the other income which is Rs14.2cr v/s Rs3.1cr(Q1FY16). We upgrade our revenue estimate by 5.4% & 4.2% for FY17E & FY18E and factor 13% CAGR for FY16-18E.       

EIL is currently trading at P/E of 20.9x and 17.1x on FY17E and FY18E earnings respectively. Using SOTP methodology we value the standalone business at 18x (15x earlier) over FY18E EPS based on its historical average. Insurance business has been performing well in the south India and it is now expanding well to northern India, and we value at its book value of Rs19 per share. We upgrade our rating from ACCUMULATE to BUY with a revised target price of Rs 204.For all recommendations, click here Disclaimer: The views and investment tips expressed by investment experts/broking houses/rating agencies on moneycontrol.com are their own, and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.