Chirag Rajendra Shah

K. J. Somaiya Institute of Management

Studies & Research, Mumbai.

Exide Industries Ltd.

Equity Research Report

COMPANY INFORMATION:
Exide Industries Ltd manufactures the widest range of storage batteries in the world covering the
broadest spectrum of applications. The company's product range includes Automotive Batteries-In
India the company markets the products under Exide, SF, Sonic and Standard Furukawa brands and
supplies to all car and two-wheeler manufacturers. In international market they sell products under
Dynex, Index & Sonic brands. Industrial Batteries-In India they sell products under Exide, Index, SF,
CEIL and Power Safe brands and in international market under CEIL,  Chloride and Index brands.
Industrial batteries cater mostly to the infrastructure sector such as railways, telecom, power
plants, solar cells and other industrial segments including uninterrupted power supply, inverters and
traction batteries. Submarine Batteries-The Company is also engaged in manufacturing of high-end
submarine batteries. They are one of the five companies in the world which has capacity to
manufacture submarine batteries for Russian and German types. They manufacture two to three
submarine batteries a year for India’s defence requirement.

Founded: 1947
Industry Name: Auto Ancillaries
House Name: Public Sector
Traded as- REGISTERED CORPORATE OFFICE:
BSE: 500086
Address:
NSE: EXIDE HOUSE, 59E, CHOWRINGHEE ROAD,
EXIDEIND
ISIN: KOLKATA - 700 020
INE302A01020
Tel. No.:
Headquarters: +91 33 2302 3400,Bengal,
Kolkata, West 2283 2118/
India.50/ 71
Fax: (033) 22832637
Email: exideindustrieslimited@exide.co.in
Website: https://www.exideindustries.com/

HISTORY:
This company was incorporated as Associated Battery Makers (Eastern) Ltd., on 31 January
1953 under the Companies Act, 1913 to purchase all or any of the assets of the business of
manufacturers, buyers and sellers of and dealers in and repairers of electrical and chemical
appliances and goods carried on by the Chloride Electric Storage Company (India) Ltd., in India, since
1916 with a view thereto to enter into and carry into effect (either with or without modification) an
agreement which had already been prepared and was expressed to be made between the Chloride
Electric Storage Co. (India) Ltd. on the one part and the company of the other part. The name of the
company was changed to Chloride India Ltd. on 2 August 1972. The name of the company was again
changed to Chloride Industries Ltd. vide fresh Certificate of Incorporation dated 12 October 1988.
The company was further changed to Exide Industries Ltd. on 25 August 1995.
The company manufactures the widest range of storage batteries in the world from 2.5 Ah to 20,600
Ah capacity, covering the broadest spectrum of applications. The company has seven factories
located across the country – two in Maharashtra, two in West Bengal - Shamnagar (Mother plant) &
Haldia, one in Tamil Nadu Hosur, one in Haryana and two in Uttarakhand. The company’s
predecessor carried on their operations as import house from 1916 under the name Chloride
Electrical Storage Company. Thereafter, the company started manufacturing storage batteries in the
country and have grown to become one of the largest manufacturer and exporter of batteries in the
sub-continent today. Exide separated from its UK-based parent, Chloride Group Plc., in 1989, after
the latter divested its ownership in favour of a group of Indian shareholders.
Exide is the only company which provide submarine batteries to Indian Navy.

Global view of Pharmaceutical Industry

The Global Battery Technology Market Size is Estimated to Grow from USD 92.0 Billion in 2020 to
USD 152.3 Billion by 2025, at a CAGR of 10.6%. Major factors fueling the market growth include
increasing demand for electric and hybrid electric vehicles, high demand for battery technology in
the renewable energy sector, upsurge in demand for automation & battery-operated material-
handling equipment in industries, and high demand from the utility sector.

Lithium-ion batteries are used mainly for automotive applications; in consumer electronics, such as
smartphones, laptops, tablets, wearable devices, and other home applications. Electric vehicles are
perceived as the future of the automobile industry and transportation system. The growing use of
PHEVs is likely to drive the Li-ion battery market during the forecast period. Li-ion batteries are also
used in a wide range of portable devices and industrial applications. Furthermore, Li-ion battery
technology is used to increase efficiency and make devices easily customizable. The increase in the
production of electric vehicles and subsequent demand for lithium-ion batteries is driving the
battery technology market in transportation. With the new carbon emission standards in place, the
need to adopt advanced battery technologies in the transportation sector has become even more
urgent.

Battery Industry in India:

India’s consumption boom, powered by an aspirational population and a healthy savings rate, plays
a pivotal role in driving economic growth. It is estimated that, by 2030, the country will add
approximately 140 million middle-income and 21 million high-income households, nearly doubling
the total share of these segments to 51 per cent. These realities help drive consumption in India.
The lead acid battery industry is evolving, led by the cyclical slowdown in the automotive segment.
However, there exists plenty of room for growth for organised players. Our automotive and
industrial sectors catalyse this growth. The country’s automobile industry is one of the world’s
largest, with two-wheelers dominating the segment in volume terms. Automotive replacement sales
offer us an opportunity for profitable growth vis-à-vis the sale to OEMs. Demand for industrial
batteries is powered by sectors such as telecom towers, railways and heavy industries, while e-
rickshaws, motive power and solar applications are some of the new growth drivers. Many projects
are coming up to harness solar power, particularly to supplement conventional power generation
and to feed mini and micro power grids. The Government’s continued focus on promoting e-mobility
solutions on Indian roads augurs well for the battery industry. However, EVs are unlikely to displace
lead acid batteries since EVs too require an auxiliary lead acid battery. OEMs are expected to localise
the production of lithium-ion batteries to optimise costs and minimise currency risk exposure.

Lithium-ion batteries find application in the telecom sector, renewable energy storage systems and
data centres. The lead-acid battery chemistries are rapidly advancing, with rising demand for high-
quality batteries that last longer and require zero or minimum maintenance. E-rickshaw batteries will
shift from Flooded to VRLA and lithium-ion, on account of lower maintenance and more mileage.
PRODUCT PORTFOLIO:
COMPANY MANAGEMENT:
Board of Directors:
Name Designation
Mr Bharat D. Shah Chairman & Independent Director
Vice-Chairman & Non-Executive Non-
Mr. R. B. Raheja
Independent Director
Managing Director & Chief Executive
Mr. Gautam Chatterjee
Officer
Mr. Subir Chakraborty Deputy Managing Director
Mr. Nawshir H. Mirza Independent Director
Mr. Vijay Aggarwal Independent Director
Mr. Sudhir Chand Independent Director
Ms. Mona N. Desai Independent Director
Mr. Surin Kapadia Independent Director
Director- Finance & Chief Financial
Mr. A. K. Mukherjee
Officer
Mr. Arun Mittal Director- Automotive

Key Management Personnel:

Name Designation
Umang Vohra Managing Director & Global Chief Executive Officer
Kedar Upadhye Global Chief Financial Officer
President, Chief Technology Officer, Manufacturing
Geena Malhotra
Operations & Respiratory CoE
Dr. Ranjana Pathak President, Medical Affairs and Pharmacovigilance &
Global Head – Quality
Dr. Raju Mistry President & Global Chief People Officer
Nikhil Chopra Executive Vice President & CEO - India Business
Paul Miller Chief Executive Officer - Cipla South Africa
Pradeep Bhadauria President and Chief Scientific Officer
Swapn Malpani Executive Vice President, Global Head - Supply Chain &
Procurement

FINANCIALS OF THE COMPANY:

Balance Sheet
Narration Mar-15 Mar-16 Mar-17 Mar-18 Mar-19
1 1 16 161. 161.
Equity Share Capital 60.59 60.68 0.90 02 14
10,6 11,3 12,38 14,068. 14,851.
Reserves 28.65 55.54 2.76 17 14
1,7 5,2 4,11 4,098. 4,316.
Borrowings 03.33 01.92 2.66 05 23
3,2 4,9 4,38 5,652. 5,653.
Other Liabilities 80.54 33.17 0.75 93 81
15,7 21,6 21,03 23,980. 24,982.
Total 73.11 51.31 7.07 17 32

Net Block 6,829.64 9,368.32 9,491.98 9,950.17 9,608.36

Capital Work in
Progress 580.90 2,060.87 1,682.98 981.33 676.18
Investments 639.78 758.69 973.01 1,258.84 2,554.14
Other Assets 7,722.79 9,463.43 8,889.10 11,789.83 12,143.64
Total 15,773.11 21,651.31 21,037.07 23,980.17 24,982.32

Working Capital 4,442.25 4,530.26 4,508.35 6,136.90 6,489.83

Debtors 1,997.72 2,356.27 2,563.05 3,102.45 4,150.72
Inventory 3,780.62 3,808.05 3,485.28 4,044.70 3,964.83
 
Debtor Days 64.27 62.37 64.99 74.72 92.59
Inventory Turnover 3.00 3.62 4.13 3.75 4.13
 
Return on Equity 11% 12% 8% 10% 10%
Return on Capital Emp 15% 13% 8% 10% 12%
Profit & Loss Account
Narration Mar-15 Mar-16 Mar-17 Mar-18 Mar-19

Sales 11,345.44 13,790.10 14,394.29 15,155.71 16,362.41

Expenses 9,183.74 11,310.43 11,918.50 12,406.85 13,265.10

Operating Profit 2,161.70 2,479.67 2,475.79 2,748.86 3,097.31

Other Income 165.55 208.21 228.69 357.65 476.57

Depreciation 504.71 754.22 1,322.93 1,322.82 1,326.31

Interest 168.29 206.63 159.38 114.23 168.43

Profit before tax 1,654.25 1,727.03 1,222.17 1,669.46 2,079.14

Tax 400.03 331.59 179.76 250.11 569.53

Net profit 1,180.77 1,359.99 1,006.39 1,410.53 1,527.70

EPS 14.70 16.93 12.51 17.52 18.96

Price to earning 48.45 30.24 47.40 31.13 27.89

Price 712.45 511.95 592.95 545.45 528.90

   
RATIOS:  
Dividend Payout 13.60% 11.81% 15.99% 17.12% 15.82%
OPM 19.05% 17.98% 17.20% 18.14% 18.93%

Cash Flow Statement:

Narration Mar-15 Mar-16 Mar-17 Mar-18 Mar-19
Cash from Operating Activity 1,173.43 1,740.81 2,381.76 1,462.76 1,691.14
Cash from Investing Activity -949.71 -4,532.56 -1,303.88 -834.17 -1,687.52
Cash from Financing Activity 164.78 3,104.06 -1,325.68 -385.48 -348.72
Net Cash Flow 388.50 312.31 -247.80 243.11 -345.10
SHARE HOLDING PATTERN:
Share holding pattern:
Standalone Sep-19 Mar-19 Dec-18 Sep-18
Promoters 36.68 36.7 36.7 36.74
Pledged 0 0 0 0
FII/FPI 23.63 25.96 25.24 25.62
Total DII 23.49 21.21 21.73 21.47
Fin.Insts 0.39 0.35 0.34 0.25
Insurance Co 3.79 3.4 2.49 2.1
MF 13.24 10.27 10.9 10.99
Others DIIs 6.07 7.19 8 8.13
Others 16.2 16.13 16.34 16.17
Total 100 100 100.01 100

DIVIDEND & RIGHTS:

Dividend:
Announcement Effective Dividend Dividend
Date Date Type (%)
20-02-20 19-03-20 Interim 150
21-02-20 19-03-20 Special 50
22-05-19 31-07-19 Final 150
22-05-18 13-08-18 Final 150
25-05-17 26-07-17 Final 100
24-05-16 12-09-16 Final 100
29-05-15 11-08-15 Final 100

Bonus:
Announcement Ex-Bonus
Bonus Ratio Record Date
Date Date
11-02-06 3:02 25-04-06 24-04-06
07-10-99 2:01 05-11-99 18-10-99
24-03-94 5:01 26-04-94 04-04-94
30-09-92 1:01 06-11-92 06-10-92
11-10-88 1:01 01-12-88 -
23-08-86 1:01 30-11--0001 -
23-08-80 1:01 30-11--0001 -
Split:

Announcement Ex-Split
Old FV New FV
Date Date
       
23-03-04 10 2 11-05-04
29-07-94 100 10 29-07-94

Rights Issue:

Announcement Ex-Rights
Rights Ratio Face Value Premium Record Date
Date Date

03-05-95 4:50 0 660 02-03-95 03-02-95

RATIOS:
  Mar-19 Mar-18 Mar-17 Mar-16 Mar-15
Basic EPS (Rs.) 18.97 17.53 12.52 16.93 14.71

Diluted EPS (Rs.) 18.93 17.5 12.5 16.89 14.66

Cash EPS (Rs.) 35.2 34.06 29.4 26.76 21.91

Book Value 190.45 181.12 161.37 147.7 136.51

[ExclRevalReserve]/Share
(Rs.)

Book Value 190.45 181.12 161.37 147.7 136.62

[InclRevalReserve]/Share
(Rs.)

Revenue from 203.08 188.25 178.92 171.65 141.3

Operations/Share (Rs.)

PBDIT/Share (Rs.) 44.36 39.55 33.62 33.46 28.98

PBIT/Share (Rs.) 27.9 23.12 17.17 24.07 22.7

PBT/Share (Rs.) 25.81 20.74 15.19 21.5 20.6

Net Profit/Share (Rs.) 18.74 17.63 12.96 17.37 15.62

Profitability Ratios:
25

20

15

10
Mar-19
5 Mar-18
Mar-17
0 Mar-16
(%
)
(%
)
(%
)
(%
) %) Mar-15
ty s(
gin gin i ed et
ar ar Eq
u oy As
s
pl
TM tM rth
/ m on
DI ofi o lE rn
P B
t Pr tw pi ta tu
Ne Ne Ca Re
on on
rn rn
etu etu
R R

Liquidity Ratios:
  Mar-19 Mar-18 Mar-17 Mar-16 Mar-15
Current Ratio 3.29 2.82 2.61 1.14 1.95
(X)
Quick Ratio 2.24 1.77 1.58 0.65 0.98
(X)
Inventory 4.13 3.75 4.13 3.62 3
Turnover
Ratio (X)
Dividend 18.59 13.41 19.23 13.3 13.6
Payout Ratio
(NP) (%)
Dividend 9.95 6.92 8.31 8.55 9.52
Payout Ratio
(CP) (%)
Earnings 81.41 86.59 80.77 86.7 86.4
Retention
Ratio (%)
Cash 90.05 93.08 91.69 91.45 90.48
Earnings
Retention
Ratio (%)

Valuation Ratio:
  Mar-19 Mar-18 Mar-17 Mar-16 Mar-15
Enterprise 46,675.09 47,221.87 51,577.15 45,820.39 58,423.78
Value (Cr.)
EV/Net 2.85 3.12 3.58 3.32 5.15
Operating
Revenue (X)
EV/EBITDA (X) 13.06 14.83 19.07 17.05 25.1

MarketCap/Net 2.61 2.89 3.31 2.98 5.03

Operating
Revenue (X)
Retention 81.4 86.58 80.76 86.69 86.39
Ratios (%)
Price/BV (X) 2.84 3.07 3.8 3.57 5.3
Price/Net 2.61 2.89 3.31 2.98 5.03
Operating
Revenue
Earnings Yield 0.04 0.03 0.02 0.03 0.02

16

14

12

10

8 ROE
ROCE
6

0
Mar-19 Mar-18 Mar-17 Mar-16 Mar-15
Peer Comparison:

PEER COMPANIES IN THE INDUSTRY:

1. Sun Pharma
2. Dr Reddys Labs
3. Divis Labs
4. Torrent Pharma
5. Aurobindo Pharma
6. Lupin
7. Abbott India
8. Cadila Health
9. Alkem Lab
10. GlaxoSmithKline
11. Pfizer
12. Ipca Labs
13. Sanofi India
14. Alembic Pharma
15. Ajanta Pharma
16. Natco Pharma
 17. Glenmark
18. AstraZeneca
19. Procter&Gamble
20. Jubilant Life
21. JB Chemicals
22. Laurus Labs
23. FDC
24. Granules India
25. Strides Pharma

TECHNICALS:
OPINION-
The COVID 19 outbreak has also presented Indian pharmaceutical companies an opportunity to
become a preferred alternate hub for manufacturing APIs and intermediates. Having recognised this
opportunity and declaring Indian pharma’s dependence on Chinese APIs a threat to national
security, the central government has approved a slew of measures to promote manufacturing of
APIs and KSMs within the country.  This includes approval of Rs 3,000 crores project to set up three
bulk drug parks in coordination with three states, as well as a 20 per cent financial incentive for the
next six years for manufacturers to make 53 critical bulk drugs, which are in turn used to make
medicines. The scheme is expected to reduce manufacturing cost of bulk drugs in the country and
dependency on other countries for bulk drugs. This incentive from the central government and the
lessons from COVID-19 are with a hope to change the global footprint of Indian pharmaceutical
companies and more importantly, reduce dependence of the domestic pharma companies on a
single supplier like China.

As the coronavirus now takes a large toll across countries, the scientific community have been
watching with optimism, the action of anti-viral Oseltamivir, anti-retroviral (ARV- for HIV/AIDS
medicines) Lopinavir and Ritonavir and anti-malarial drugs chloroquine and hydroxychloroquine.
Hyderabad-based CSIR-Indian Institute of Chemical Technology (IICT) has tied up with
pharmaceutical giant Cipla to work on development of anti-viral drugs to contain COVID-19. The
company is doubling production of these therapies. Cipla already distributes Swiss company Roche’s
anti-inflammatory drug Actemra in India, which can be used in patients with severe lung problems.
Cipla has an upper hand in respiratory, anti-flu and HIV drugs as all three are believed to be effective
in the present situation. Cipla is both fast-tracking development of these drugs with government
laboratories, and repurposing its wide portfolio of respiratory, asthma, anti-virals and HIV drugs to
meet challenges arising from COVID-19 in India. It will be interesting to see how the stock performs
in the long run.

My Recommendation-
Bullish / Buy / Long