Stock Review: EXIDE INDUSTRIES

Exide Industries is growing on the back of the strong vehicle sales that improved its margins and enabled a double-digit growth in sales and profits in 2010. Being leader in power storage solutions business with a 70% market share, it also enjoys the pricing power enabling it to safeguard operating margins even in a downturn. Backward integration for inputs in the past few years, which accounts for 80% of total operational cost, has improved its operating margin to around 18%, which is higher than its peer group. With the expectation of rise in demand for automobiles, Exide is expected to post sustainable earnings in future. Rationalisation of cost through use of captive sourcing will further add to operating margins. So, investor with low-risk appetite and expectation of reasonable return can take exposure for at least 1-2 years.