According to Exide management, demands for most of its lead-acid battery excluding batteries used by telecom sector (2% of sales) are growing quite strong
at over 17%. Company has kept price of retail segment (70% of sales) unchanged despite 20% decline in lead price globally. FY10 annual report indicates stronger growth ahead given that (1) company is expanding capacity to meet demand; and (2) launching e-bike battery and micro-hybrid car battery having higher value
Exide’s outlook following our interaction with management and the positive comment in FY10 annual report. We expect FY11e EPS to grow by 29% to Rs8.55/sh, which is 11% above consensus. We maintain Buy with our sum of parts based target price raised to Rs155 driven by (1) increase in the
fair value of battery business to Rs144/sh as we have rolled over to PE of 15xFY12e (2) We keep the fair value of insurance JV unchanged at Rs11/sh.
