Exide Shares Complete Fundamental Analysis and Future Outlook
Exide Industries produces batteries for Automotive, Industrial and Submarine applications. It has 9 manufacturing plants in India and exports currently to 50 nations in the world. The current capacity of Exide plants combined is 57 million for Automotive batteries and 5 billion Ah for Industrial batteries.
- The company’s shares have seen a sharp correction from its 52 weeks high of INR 229.50 and currently has a market capitalization of INR 109 Billion.
- Exide has a presence of 100+ years in India and has a well-developed distribution network. It currently has 48000+ dealers in India and has a market presence in 50+ countries.
- Exide is the market leader in all Automotive application in India followed by Amara Raja Batteries. It serves some major clients in India like Maruti Suzuki, TATA Motors, Hero Motocorp and Mahindra.
- The business model is asset-heavy as it requires huge capital for capacity building. The company, however, has been able to endure 2 world wars and the partition of India. This shows the legacy and quality of management which the company has.
- The only concern is the over-dependence on the Auto sector which is cyclic in nature. This makes the company suffer from business cycles every 5–7 years in India. Recently, the share price has fallen because of the slowdown in the auto industry.
I have evaluated the company on 10 fundamental categories and each has been given a rating out of 5 stars. From this, I have arrived at a combined stock rating for the company.
This is the summary of the analysis. You can read the detailed analysis with the excel models on my blog (Check the source link)
Source: Exide Shares Complete Fundamental Analysis
Some insights for the coming years from management discussion & analysis (MD&A) and con calls are as follows.
- The company is a supplier to almost all the major auto manufacturers in India. This will impact them negatively as the auto sector is facing slow down and they have too much exposure.
- The COVID-19 outbreak has stopped production in all factories and therefore this is going to worsen the situation. Exports will also be severely impacted.
- The company has a large un-utilized capacity (due to over-investment in PPE) and now it is reducing their asset turnover and efficiency.
- The overall loss due to the auto sector slowdown and COVID-19 is estimated to be above 25–30% of the FY 2020 revenue.
The company does not show any significant growth opportunities in the near term and is going to be severely impacted due to the auto sector slowdown and COVID-19 outbreak. However, the company has always demonstrated management capabilities and solid fundamentals over the years.
Subscribe to my Blog: Subscribe — Billion Dollar Valuation
Join my Telegram Channel
