Company Update | Auto Ancillary

January 23, 2013

Exide Industries
Acquisition of 50% stake in IVL
Exide Industries (EXID), which currently has 50% stake in ING Vysya Life Insurance Company (IVL), has decided to acquire the remaining 50% stake in IVL for `550cr, subject to the necessary regulatory approvals. IVL is a marginal player in the life insurance business with a market share of ~1% in FY2012. IVL posted a loss of `31.2cr in FY2012. Key highlights of the deal: EXID will be buying out the minority stake in IVL held by ING group (26%), Hemendra Kothari group (16.32%) and Enam group (7.68%) for a total consideration of `550cr. The company intends to fund the acquisition through internal accruals. The deal value implies a market capitalization of `1,100cr for IVL, which is lower than the valuation of `1,350cr ascribed by us (based on 15x FY2014E NBAP). EXID has so far invested `744.4cr in IVL for its 50% stake. This implies that the company is buying the remaining 50% stake at a discount of ~26% of its investment value. This we believe could be due to the fact that the new business premium for IVL has been declining continuously (down 5% in FY2012) and also owing to the fact that the ING group was looking to exit the business. The ING group had earlier announced its intentions to exit its non-banking business such as insurance and asset management in Asia, including India, as a strategy to pay back the government bailout funds it received during the financial crisis in 2008. Going ahead, EXID intends to find another strategic partner for the life insurance business which could infuse fresh equity into IVL for future expansion. We would be watchful of the valuations the company gets for its insurance business in the future and the future expansion plans of the insurance business. In the near term however; we believe that EXID will need to make more investments in the insurance business which may be a drag on its cash flow. Outlook and valuation: At `125 the stock is trading at 15.9x FY2014E earnings. We value EXIDs core business at 15x FY2014E earnings, which along with its stake in IVL yields a fair value of `131 (SOTP basis). We maintain our Neutral rating on the stock.

NEUTRAL
CMP Target Price
Investment Period
Stock Info Sector Market Cap (` cr) Net Debt (` cr) Beta 52 Week High / Low Avg. Daily Volume Face Value (`) BSE Sensex Nifty Reuters Code Bloomberg Code Auto Ancillary 10,617 (76) 0.5 166/113 165,981 1 20,027 6,054 EXID.BO EXID@IN

`125 -

Shareholding Pattern (%) Promoters MF / Banks / Indian Fls FII / NRIs / OCBs Indian Public / Others 46.0 26.9 17.1 10.0

Abs. (%) Sensex Exide Industries

3m 7.0 (10.4)

1yr 19.6 (2.3)

3yr 18.8 3.9

Key financials - Standalone

Y/E March (` cr) Net sales % chg Adj. profit % chg Adj. OPM (%) EPS (`) P/E (x) P/BV (x) RoE (%) RoCE (%) EV/Sales (x) EV/EBITDA (x)
Source: Company, Angel Research

FY2011 4,547 19.9 633 17.8 19.4 7.4 15.9 3.9 25.5 30.5 2.0 10.5

FY2012 5,107 12.3 461 (27.1) 13.4 5.4 23.0 3.5 15.9 19.3 1.8 13.1

FY2013E 6,016 17.8 497 7.6 12.7 5.8 21.4 3.1 15.4 19.2 1.5 11.5

FY2014E 7,026 16.8 667 34.2 14.4 7.8 15.9 2.7 18.2 23.3 1.2 8.3

Yaresh Kothari
+91 22 39357800 Ext: 6844 yareshb.kothari@angelbroking.com

Please refer to important disclosures at the end of this report

Exide Industries | Company Update

Research Team Tel: 022 - 3935 7800

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Disclosure of Interest Statement 1. Analyst ownership of the stock 2. Angel and its Group companies ownership of the stock 3. Angel and its Group companies' Directors ownership of the stock 4. Broking relationship with company covered

Exide Industries No No No No

Note: We have not considered any Exposure below `1 lakh for Angel, its Group companies and Directors

Ratings (Returns):

Buy (> 15%) Reduce (-5% to -15%)

Accumulate (5% to 15%) Sell (< -15%)

Neutral (-5 to 5%)

January 23, 201

Exide Industries | Company Update

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Research Team Fundamental: Sarabjit Kour Nangra Vaibhav Agrawal Bhavesh Chauhan Viral Shah Sharan Lillaney V Srinivasan Yaresh Kothari Ankita Somani Sourabh Taparia Bhupali Gursale Vinay Rachh Amit Patil Shareen Batatawala Twinkle Gosar Tejashwini Kumari Technicals: Shardul Kulkarni Sameet Chavan Sacchitanand Uttekar Derivatives: Siddarth Bhamre Institutional Sales Team: Mayuresh Joshi Hiten Sampat Meenakshi Chavan Gaurang Tisani Akshay Shah Production Team: Tejas Vahalia Dilip Patel Research Editor Production tejas.vahalia@angelbroking.com dilipm.patel@angelbroking.com VP - Institutional Sales Sr. A.V.P- Institution sales Dealer Dealer Sr. Executive mayuresh.joshi@angelbroking.com hiten.sampat@angelbroking.com meenakshis.chavan@angelbroking.com gaurangp.tisani@angelbroking.com akshayr.shah@angelbroking.com Head - Derivatives siddarth.bhamre@angelbroking.com Sr. Technical Analyst Technical Analyst Technical Analyst shardul.kulkarni@angelbroking.com sameet.chavan@angelbroking.com sacchitanand.uttekar@angelbroking.com VP-Research, Pharmaceutical VP-Research, Banking Sr. Analyst (Metals & Mining) Sr. Analyst (Infrastructure) Analyst (Mid-cap) Analyst (Cement, FMCG) Analyst (Automobile) Analyst (IT, Telecom) Analyst (Banking) Economist Research Associate Research Associate Research Associate Research Associate Research Associate sarabjit@angelbroking.com vaibhav.agrawal@angelbroking.com bhaveshu.chauhan@angelbroking.com viralk.shah@angelbroking.com sharanb.lillaney@angelbroking.com v.srinivasan@angelbroking.com yareshb.kothari@angelbroking.com ankita.somani@angelbroking.com sourabh.taparia@angelbroking.com bhupali.gursale@angelbroking.com vinay.rachh@angelbroking.com amit.patil@angelbroking.com shareen.batatawala@angelbroking.com gosar.twinkle@angelbroking.com tejashwini.kumari@angelbroking.com

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January 23, 201