Exide Industries slips 8% on weak March quarter results

Shares of Exide Industries slipped 8 per cent to Rs 158.50 on the BSE on Monday in the intra-day trade after the company reported 21 per cent year on year (YoY) drop in net turnover at Rs 2,055 crore in the March quarter (Q4FY20) due to lockdown. The auto ancillary company had posted net turnover of Rs 2,598 crore in the year-ago quarter.


The company’s profit after tax too declined 20 per cent YoY to Rs 168 crore as against Rs 211 crore reported in the corresponding quarter of the previous fiscal.


The management said the automotive sector is facing a lot of challenges due to regulatory changes, technology shifts and demand uncertainty due to which there was a distinct slowdown in auto OE segment. On the top of it, the year-end sales across all segments of the company were severely impacted after the complete lockdown was imposed in the country as a result of Covid-19.


"The company's gross margin was above estimate and expanded 310 basis point YoY (200bp QoQ) to 38.2 per cent. This was largely attributed to the benefit of the mix as well as inventory changes, partially offset by an increase in lead prices in Q3FY20 (as the impact of lead prices comes with a quarter lag). EBITDA (earnings before interest, taxes, depreciation and amortization) margins contracted 130bp YoY (-20bp QoQ) to 13.1 per cent as the benefit of lower raw material cost was overshadowed by negative operating leverage," Motilal Oswal Securities said in result update.


"Exide Industries would see a lower benefit from lead prices than Amara Raja Batteries due to its captive smelter. On the other hand, Exide Industries should see a better mix owing to higher aftermarket share," it said. The brokerage firm prefers Exide Industries as it offers superior risk-reward considering its market leadership, technology alliances, backward integration, and better mix.


At 01:27 pm, the stock was trading 7.6 per cent lower at Rs 159.90 on the BSE, as against 0.06 per cent rise in the S&P BSE Sensex. The trading volumes on the counter more than doubled with a combined 14 million shares changing hands on the NSE and BSE till the time of writing of this report.