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
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