Credit Suisse maintains outperform on Exide

MUMBAI: Credit Suisse has maintained its outperform rating on Exide Industries citing expectations of margin improvement and healthy replacement market growth as the key reasons.

"We expect margins to improve to 17% over next two quarters on higher inverter sales and improvement in the replacement to OE (original equipment) mix," said Credit Suisse analysts Jatin Chawla and Akshay Saxena in a note to clients.

At 3:05 PM on Friday, Exide shares were at Rs134.70, down 1.3% below the previous day's close. The broker maintained its target price for Exide at Rs159.

"In spite of a decline in profitability, Exide continues to generate healthy free cashflow and operating RoCE (adjusted for investments) remains impressive at about 20%," the Credit Suisse analysts said.

"Exide's cash flow generation remains solid with its free cash rising from Rs 2.5 bn to Rs3.5 bn driven by efficient working capital management and lower capital expenditure," he said