>EXIDE INDUSTRIES (MERRIL LYNCH)

■ Demand outstripping supply: Exide management is seeing retail demand for its lead acid battery growing at more than 18%. Company is stretching its capacity to meet such demand growth to accelarate along with stronger GDP growth in India.

■ High margin to sustain: According to the company current profit margin though quite high compared to historical average, is sustainable. Company is not ruling out the possibility of a moderate decline in margin at EBITDA level. However, net profit margin is sustainable and revenue growth is likely to be stronger going forward. Sustained net margin and stronger revenue growth could help Exide achieve 20%+ EPS growth in FY11e.

■ New growth driver attractive: Exide has identified a host of new growth opportunities and investment plans including (1) battery driven bycycles and motorcycles (2) battery for solar power (3) Lithium battery (4) lead smelter capacity in Middle East and Eastern Europe, (5) expansion of Sri Lanka battery business that will have tax advantage and can export and (6) new greenfield battery plant.

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