Eveready Industries hits 5-month high on hopes of better business outlook

So far in August, the stock has gained 16 per cent, after the company reported healthy growth in topline performance, backed by volume gains despite a market slow down due to inflationary conditions.

Shares of Eveready Industries hit five-month high of Rs 367.70, up 3 per cent on the BSE in Wednesday’s trade. The stock has surged nearly 7 per cent in the past two days on hopes of better business outlook. The stock of batteries maker quoted at its highest level since March 3, 2022. Earlier, it had hit a 52-week high of Rs 413.30 on October 6, 2021.

Eveready is a household name in batteries, flashlights and lighting. With over 50 per cent market share in India, Eveready has become a common name associated with batteries.

So far in the month of August, the stock has gained 16 per cent in seven days after the company reported 18 per cent year-on-year (YoY) growth in total income at Rs 335 crore in June quarter (Q1FY23).  The company's healthy growth in topline performance was backed by volume gains, despite a market slow down due to inflationary conditions.

Earnings before interest, taxes, depreciation, and amortization (ebitda), meanwhile, was down 28.6 per cent YoY to Rs 42.1 crore, whereas margin contracted to 12.6 per cent from 20.9 per cent in Q1FY22.

Eveready said the performance in Ebitda factors the impact of raw material inflation which could not be fully passed on. Further, return of business overheads which had been curtailed in the previous year owing to the pandemic restrictions also strained the company's margin profile.

The company said it continues to take initiatives to keep costs under check and anticipates margins to improve going forward. The company is focused on driving manufacturing efficiencies with prudent cost management across various verticals to improve the profitability.

Eveready onboarded several professionals across mid-to-senior level and within various functions to steer its growth momentum with focus on driving healthy gains across categories.

"While the situation arising out of steep inflation may cause short term disruptions in demand, the overall demand is likely to remain strong. The Government’s initiatives to make India self-reliant would also augur well for the domestic industry. As a consequence, both batteries and flashlights should show reasonable growth in FY22-23. Thus, the outlook on battery and flashlight categories remains positive," Eveready said in their FY22 annual report.

Since the company's prospects are promising in the lighting & electrical products category, it has become a key focus area and an avenue for growth.

"The market has now almost entirely shifted from CFL to LED bulbs and Luminaires. LED bulbs and LED based Luminaires with higher margins now constitute more than 80 per cent of the category turnover and these will be the growth drivers for the category and the overall business of the company. Hence, the outlook is upbeat with potential for both growth and profitability," the management added.

Meanwhile, Anand Burman has been appointed non-executive chairman of Eveready Industries in the first board meeting since the Burman family – promoters of Dabur India – took control of the company.

In the past one year, the stock has underperformed market by falling 2 per cent, as compared to 8 per cent gain in the S&P BSE Sensex.