>Exide Industries (MF GLOBAL)

In-line Results

Exide's Q4FY09 results came largely in line with our expectations on the PAT front, while the top-line was little below estimates. The demand outlook appears challenging(mainly in the automative segment)during FY10 but we believe that EIL is well placed to sail through it with the help its unmatched distribution network, competitive pricing and increasing backward integration strength. We continue to maintain our positive stance on EIL. BUY with a price target of Rs. 61.

Q4FY09 Resilt Highlights and Outlook

■ Net sales for the quarter stood at Rs 7.98 billion (+0.9% YoY), little below our estimate, as the price cuts became effective for the entire quarter.

■ On demand front pressure from the auto space remained (though it was better QoQ),while the industrial segment maintained a stable growth (primarily coming from inverter, UPS and telecom space).

■ Operating margin at 16.6% (+240bps YoY and +200 QoQ) surprised us positively, indicating that the effect of lower lead prices have started flowing in. As a result, operating profit for the quarter grew 18.3% YoY at Rs 1.33 billion.

■ PAT for the quarter at Rs 682 million was 8.6% higher YoY (21.5% up QoQ) and ahead of estimated Rs 666 million. Net profit for the full year FY09 stands at Rs 2.84 billion, translating inti an EPS of Rs3.6.

■ EIL incurred a total Capex of Rs 1.6 billion for FY09.

■ We introduce our FY11 estimates for EIL, where we estimate 10.5% earnings growth on the back of 19.6% sales growth and 150bps cut in operating margin.

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