Exide plans to raise Rs 500 crore via QIP

Exide Industries is seeking to raise around Rs 500 crore through a qualified institutional placement (QIP) by this month-end or early March.

The storage battery major is planning roadshows for potential investors in the United Kingdom and southeast Asia.

Market sources hinted that the issue may not exceed 5 crore equity shares of Rs 1 each. Company officials were tightlipped on the issue and would talk only after the placement is done.

Exide plans to invest in technology, research and development and capacity upgradation.

The funds could also be used for future acquisitions or for infusing
capital into its life insurance venture, ING Vysya Life, where it has a 50% stake.

Given the global volatility of lead prices over the last couple of years, Exide had, in the second half of 2009, acquired a 51% stake in a lead smelter Leadage Alloys India for Rs 33.4 crore. It bought Tandon Metals, another smelting company, for Rs 25 crore in late 2007. These units now meet 28% of Exide’s lead requirements.

The battery company raked in a net profit of Rs 402 crore in the first nine months, largely attributed to the improved product mix, volume growth and cost efficiencies.

Gaurant Dadwal, analyst with Jaypee India Research, said Exide will benefit from the growth in the automobile industry. “We believe that Exide, with its strong market share and presence in the organised replacement market, will be the key beneficiary”.

Vaishali Jajoo and Shreya Gaunekar, analysts with Angel Securities expect the demand for auto batteries, which contributes
o 65% of Exide’s profit, to grow at 9-10% per annum, while the industrial battery segment is expected to register a higher 12-13% growth per annum over the next couple of years.