Here is an excerpt of 36 Page Morgan Stanley's Report on Exide industries Ltd with a BUY Recommendation,
Given India’s 15 million car base, 80mn twowheeler base and 15/20% projected growth, the automotive battery segment should see strong demand. We prefer to play the auto growth story with Exide rather than OEMs, as it has less competition and a better earnings profile with higher margins and ROEs.
Exide currently sources 45% of its lead – the key raw material for batteries – from captive smelters and aims to raise this proportion to 70% by FY13. Exide generates 36% of its revenues from the auto battery replacement market, where demand remains steady; for instance, in FY09, replacement demand rose 18% even as OEM sales fell 3%.
The sum-of-the-parts (SOTP) analysis yields a price target of Rs193 for Exide. The core business is valued at 17x our FY12 EPS estimate of Rs 9.76
