India’s biggest battery manufacturer Exide Industries has few competitors. How big is Exide in its industry? For every single battery that its next biggest competitor sells, Exide sells three! And with 38,000 plus outlets, Exide has the largest network.
Automobiles recorded strong sales between FY09 and FY11. Four-wheelers grew at a CAGR of 28.5 per cent between FY09 and FY11 while two-wheelers recorded a growth of 25.9 percent. That is now expected to boost the battery demand to upwards of 14 per cent growth in the next couple of years as automobiles sold during that period come up for replacement (batteries typically last between 1.5-3 years).
Exide has to grapple with unbranded cheaper variants which have captured nearly 42 per cent of the replacement market. Yet, Exide’s earnings have compounded at 52 per cent in the last five years. Buy.
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