Dru is 55 proof and hence will not be available in India except the airports . So unlikely to make significant impact soon on sales .

The company started a new business from ground zero in Q1 FY24. Even then, it always gave positive EBITDA nos. That it self is a big deal, most business will fail this criteria at that stage. As it scaled over next 3 qtrs. it slowly got very close to it’s desired margins. Normally Since PE is a historical measure it will make sense to use it when history is normal. Clearly it isn’t the case when a business is just born. That’s reason no.1.

2nd like you also mentioned, since interest income is a BIG part of the PAT and we know that the cash that’s giving that income is going to get used, then no point including that in eps and getting to PE. EV/EBITDA helps to get over this problem. and forward looking EV/EBITDA ratio is a better measure to see if it makes a case for investment or not. These are MHO, others can help more in theoretical concepts. I am not a purist when it comes to valuation and investment theory related topics

Eveready Industries –

Q1 FY 25 concall and results updates –

Revenues – 349 vs 364 cr
EBITDA – 50 vs 44 cr, up 14 pc ( margins @ 14 vs 12 pc )
PAT – 29 vs 25 cr, up 18 pc

EBITDA from batteries – 39 pc
EBITDA from flashlights – 9 cr
EBITDA from LED lights – 2 cr

Company continues to hold 53 pc Mkt share in the overall batteries segment. 90 pc of the mkt still comprises of Zn-Carbon batteries which continued to face headwinds / weakish demand scenario in Q1

However, the alkaline batteries grew strongly @ 67 pc YoY in Q1 in value terms on the back of 52 pc growth in FY 24 ( although the base is smaller )

61 pc of company’s turnover and 85 pc of company’s profitability comes from the batteries segment

Battery operated flashlights de-grew by 3 pc in Q1 vs 15 pc de-growth in last FY. However due to normal monsoon, good demand from rural channels is expected for flashlights wef Q2. However the rechargeable flashlights are growing

**LED bulbs grew by 6 pc, emergency bulbs grew by 66 pc, LED tube lights grew by 12 pc, professional luminaries grew by 50 pc – all in volume terms. However, due to steep fall in prices, revenue growth in LED lights segment was limited to 2 pc only. EBITDA in this segment was 3.1 pc vs break-even EBITDA in last FY **

Sustained A&P costs at 9 pc – as a necessary brand building exercise

Have approved an investment of 180 cr to set up an Alkaline battery plant with a capacity to make 36 cr batteries / yr. This plant should get commissioned by end of FY 26. Alkaline batteries are growing at rates much higher than Zinc – Carbon batteries. This is almost equal to the current size of entire alkaline batteries mkt in India

Even in alkaline batteries, there r 2 segments – value and premium. Even in value segment, the company is likely to be benefitted by at least 10 pc ( in price terms ) by making the batteries in-house vs importing them

The gross margins in the premium alkaline batteries are 5-6 pc higher than the value end of alkaline batteries ( which intern are similar to Carbon – Zinc margins )

The current share of premium vs value in alkaline batteries is about 30:70

Total size of batteries mkt is around 300 cr units / 3000 cr in value terms. Out of this, the value size of alkaline battery mkt is around 300 cr ( or 10 pc in volume terms ). Alkaline mkt is growing in high double digits ( around 20 pc or so ) vs flattish growth in Carbon-Zinc segment. Even in middle income countries, alkaline batteries command a mkt share of 40-50 pc vs 10 pc in India. A similar trend may play out in India over the next decade

The company expects its new alkaline battery unit to hit an asset turnover of 1 by the third year of its operation

Company’s alkaline battery factory is going to be the first one in the country

Company is likely to launch newer products in the adjacent categories. Company did not announce the names due competitive reasons

Company intends to make its LED lighting division cross the 400 cr topline mark this yr. Company aims to hit high single digit / low double digit EBITDA levels in this segment in about 2-3 yrs

In the alkaline battery space, Duracel is the No 1 player with Eveready being a distant no2. Eveready sells about 6 cr alkaline batteries / yr vs 25 cr + kind of sales for Duracel

Current debt on books @ around 260 cr @ 8.7 pc interest rate

Company intends to clock > 11 pc EBITDA margins for full FY 25

Company has launched a new product – electric mosquito killing rackets in Q1. Priced @ Rs 499, 599 and 799

Disc: holding from lower levels, biased, not SEBI registered, not a buy / sell recommendation

32ee0858-29d4-41da-b1cc-1929ad84734e.pdf (866.5 KB)

Possible turnaround ?