Eveready Industries –
Q2 FY 25 results and concall highlights –
Revenues – 363 vs 365 cr
EBITDA – 48 vs 46 cr, up 5 pc
PAT – 30 vs 25 cr ( due lower interest costs )
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. This will be the first alkaline battery manufacturing unit in the country
Alkaline batteries grew 62 pc in Q2 – a very promising trend
Flashlights de-grew in single digits in Q2 ( vs FY 24 where the de-growth was I double digits ). However the rechargeable flash lights continue to grow
Lighting business continues to witness price erosion despite descent volume growth
H1 is always stronger for the company vs H2 and that trend is likely to continue in this FY as well. However, company does expect a much better H2 vs last FY
Company had embarked on a revamp of ’ route to market’ exercise 5-6 Qtrs ago ( basically a full revamp of their distribution model ). The same has now been completed. They believe, it ll start to show good results wef Q3
Company believes they r under invested in the lighting business and have a lot of ground to cover wrt expanding distribution, marketing and advertisement efforts etc
Segment wise revenues, EBITDA margins for H1 –
Batteries – 456 cr, EBITDA margins @ 17.5 pc
Flashlights – 108 cr, EBITDA margins @ 11.5 pc
Lighting – 166 cr, EBITDA margins @ 2.5 pc
Alkaline Batteries form only 10 pc of battery mkt in India. However, global avg is aprox 40 pc for the Alkaline batteries. One great advantage that the company has is that their Zn-Carbon batteries are available in aprox 50 lakh outlets vs Duracell’s alkaline batteries which are only available in aprox 5 lakh outlets. So, as the per capita income increases, company can quickly catch up vs the mkt leader in the Alkaline segment purely on the back of far stronger distribution reach
Mkt size of Carbon-Zinc batteries is 300 cr batteries @ Rs 10 each – amounting to Rs 3000 cr. For alkaline batteries, the size would be around 30 cr batteries @ Rs 20 each ( Rs 15 for value alkaline batteries and Rs 50 for premium alkaline batteries ) – amounting to Rs 600 cr ( aprox )
Currently, Carbon-Zinc battery mkt is largely stable. The Alkaline battery mkt is growing rapidly @ 20 pc CAGR
Top 3 players in the Carbon – Zinc mkt are – Eveready, Nippo and Panasonic with Eveready @ 56 pc mkt share
In the Alkaline battery segment, Duracel is the mkt leader with 85 pc mkt share. Eveready is a distant no 2 with 10 pc mkt share
Company’s flashlights business is roughly split 50:50 between rechargeable and non-rechargeable flashlights
Company expects their alkaline battery plant to be operational by Q4 FY 26
Once the company’s alkaline battery plant comes up, they will also be open to do contract manufacturing for other players
Rs 400 cr business / yr is the scale that the company aspires to achieve in their lighting business ( in the short term ). Beyond this number, the profitability should start to see a meaningful improvement
Disc: I keep trading in/out of this stock, not SEBI registered, not a buy/sell recommendation, I’m biased
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