Exide extends losses to 6th day; Q3 disappoints

Exide Industries shares fell as much as 3 per cent on Tuesday on the back of a 25.52 per cent drop in net profit for the December quarter. This is the sixth straight day of fall in Exide shares.

The battery maker on Monday reported net profit of Rs 77.52 crore against Rs 104 crore in the corresponding period a year ago. Net sales declined to Rs. 1,301 crore as against Rs. 1,462 crore in the same period of corresponding fiscal year.

Exide's adjusted profit, after taking into account a net forex loss of Rs 4.7 crore, was 36 per cent below consensus, Nomura said.

Exide Industries managing director and CEO PK Kataky blamed sluggish demand in the auto sector for the underperformance of the company.

"In the replacement market, the demand for heavy duty and medium duty commercial vehicles including passenger cars used for commercial application remained subdued," Mr Kataky added.

Car sales fell 10 per cent in 2013, the first annual decline in 11 years. Commercial vehicle sales fared even worse, down over 15 per cent for the year.

Nomura said the sharp decline in revenues was a concern, though the brokerage believes that margins can bounce back from current levels.

Exide's adjusted ebitda margin was 11.3 per cent, 270 basis points below Nomura's estimate of 14 per cent. Nomura said higher advertisement and publicity expenses in Q3 and price cuts in December (due to rupee appreciation from around 67 levels to around 62 levels) hurt margins.

The company does not intend to take any further price cuts to increase volumes, Nomura said. This is a positive development for other battery makers such as Amara Raja, whose shares were flat at Rs 339 today.

Exide shares traded flat at Rs 105 as of 11.20 a.m. after earlier hitting a low of Rs 102. The stock has fallen more than 10 per cent over the last five sessions.

Nomura retained its buy call on Exide with a target price of Rs 146.