Eveready Industries: Charged up

Eveready Industries: Charged up

Shares of Eveready Industries rallied nearly 8% to Rs 196.95 apiece Wednesday on talks of Dabur India promoters buying stake in the battery maker.
A media report suggests big development is likely on the cards regarding Dabur India. Promoters of this Fast Moving Consumer Goods (FMCG) company are expected to increase their stakes in Eveready and get management control. The promoters of Dabur are planning to increase their stake in Eveready – a flagship company of the BM Khaitan Group – and later come out with an open offer.

The move seems to be motivated by the underlying strong fundamental factors that also suits Dabur’s strategy of achieving inorganic growth.
Reduced dumping of batteries from China with the implementation of quality standards by the Bureau of Indian Standards (BIS) is turning out to be a game-changer for Eveready Industries India.
Batteries as a category was stagnating, but started showing growth in the last three to four quarters due to BIS implementation.

As imports reduced, Eveready clocked significant volume growth in batteries. Imports during the half-year (April to September 2019) were at 85 million units; the comparative number for the first half of the current financial year was 20 million units. For the whole of last financial year, imports were at 120 million units. China accounted for most of the imports.

Eveready has a 52% share in the dry cell battery market and is reaping the benefits of reduced imports. In flashlights, where Eveready has a 75% share of the organized market, BIS has not been implemented, but it has benefited from the break in supply chain for the unorganised segment due to Covid.
In the quarter ended September, it posted its highest ever net profit without any other income at Rs 58.02 crore, an increase of 216 per cent, year-on-year. EBIDTA margins at 20.3% were also the best ever. Battery margins were at 31.1% on a turnover of Rs 239.6 crore.

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