Brokers’ Call: Nomura upgrades Exide to buy

Nomura Equity Research has upgraded Exide Industries from ‘Neutral’ to ‘Buy’ with a target price of Rs 151. “We estimate the auto batteries replacement segment will grow at 16-17% over FY14F driven by the strong cycle. Exide so far has not benefitted from the strong industry growth given that its efforts to gain market share have weighed on profitability. However, now that the company has regained market share close to its desired level (33% as per mana1gement), the focus will likely shift back to profitable growth, in our view. Overall, we expect a strong 20% earnings CAGR over FY13-15F. The current valuation at 12.5x FY15F EPS (ex-insurance business) looks quite reasonable compared with its historical average of 15-16x,” Nomura said in a report.