Skip to main content

Panasonic Energy


Panasonic Energy manufactures Dry Cell Batteries.

The batteries fall under two main categories – Zinc Carbon and Alkaline (aimed at the high income segment).  All batteries are now sold under the “Panasonic” brand name. 

The company recently commenced manufacturing of Flashlights to complement the battery business.

The company reported erratic performance in the last five years – reporting 5cr in operating profits on revenues of over 180cr in the last financial year.  It held a net cash position of over 20cr as at 31st March, 2012.

Management seems optimistic about the business as a result of very low consumption of batteries per person in India relative to global standards.  They also assert that the concepts of compactness and portable energy needs should spur demand for battery appliances and hence, batteries.

Demand growth, however, is very low at about 4% per year – and some markets are even declining.  Moreover, changes in consumer usage patterns of gadgets and appliances impacts demand for various battery types.

The business is exposed to a major risk of cheap imports of low-performance AAA batteries from China in large volumes.

Further, increases in raw material costs (zinc, metal sheets, carbon rods, manganese ore, etc.) directly impacts profit margins since the business does not have much pricing power with customers.

The low penetration of battery appliances may not turn for the better as management expects if technological advances in product development reduce the need and hence, demand for batteries.

Comments

Post a Comment

Popular posts from this blog

On The Radar: India's Small-Cap Equities (Concluded)

We have been running a series of articles titled ‘Under The Radar: India’s Small-Cap Equities’ beginning in December 2011 - and followed up twice - with the last article in December 2013. We would like to conclude this series after updating the small-cap index level and returns, comparing it to our expectations ex-ante, and analysing the current scenario.  Following this, we have also outlined where we may take this blog in the future. The small-cap index closed at 11,087.07 on December 31 st , 2014.  This compares to a level of 6,150.65 in our last article – resulting in an advance of over 80% to date. This is a handsome absolute return by any standard, particularly compared to Indian government bonds, which yielded around 8-9% for the period.  This justifies the conclusion at the end of our previous article that “small-caps in India offer among the most attractive bargains during any time since 2006 and certainly in the entire Indian stock market today...
1 comment
Read more

Under the Radar: India’s Mid-Cap and Small-Cap Equities

Indian stock markets have been one of the worst performers in 2011 – worse than their BRIC peers, worse than the rest of Asia and far worse than the US with the leading indices declining about 25% during the year.  Foreign investors in India have also suffered substantial declines of nearly 20% in INR currency value. There appear to be several reasons for the market’s dislike for Indian equities in 2011, which include persistent inflation (including food inflation, which constitutes the major proportion of the typical Indian household), political paralysis (e.g. rollback of foreign investment in retail etc.) and global concerns about the solvency of several Eurozone countries. As a result, estimated GDP growth for the next financial year has been revised downwards from about 8% earlier in the year to about 6% now - with many market commentators wondering whether this rate of growth is India’s ‘new normal’.  This is still, however, substantially higher than global av...
2 comments
Read more

Under The Radar: India’s Small-Cap Equities (Part Three)

In February of this year, we summarised the valuation parameters of the BSE Small-cap Index in India (now the S&P BSE Small Cap Index) - following on from an earlier report we wrote in December, 2011 - and drew certain conclusions. We would like to update the valuation scenario with the data today, review those conclusions, and form new ones based on the available information. The small-cap index closed today (17 th December, 2013) at 6,150.65 with an indicated price to book value of 1.04. The closing value as on February, 2013 was 7,006.73 representing a decline of over 12% as of today. The current index value masks a greater fall of over 27% to a low of 5,085.56 in August, 2013. This represents an unsatisfactory overall performance for those who invested in small caps at the beginning of the year. In our earlier report, we made two assumptions towards the end of our report to form a conclusion as to prices then:          ...
Post a Comment
Read more