Exide hits over 4-year high; surges 23% in one month on positive outlook

Shares of Exide Industries hit an over four-year high of Rs 257.40, up 2 per cent on the BSE in Friday’s intra-day trade on positive business outlook. The stock of auto components & equipments company was trading at its highest level since January 2019. In past one month, it surged 23 per cent, as compared to 3.8 per cent rise in the S&P BSE Sensex. Exide Industries is primarily engaged in the manufacturing of Storage Batteries and allied products in India.

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The company in its financial year 202-23 (FY23) annual report said that it anticipates a significant surge in its order book as the company makes headway in expanding its range of products and services. With strategic focus on key sectors such as Industrial UPS (IUPS), traction and solar, the company aim to strengthen its position in these markets, where the company is a leading player.
 
The HUPS market is expected to grow at an accelerated pace over the next 5-7 years. Technology advancements, increasing demand for power backup solutions, increased factory automation and expansion of IT sector will drive the demand. The Government’s vision of 450GW of renewable energy by 2030 and Ministry of New and Renewable Energy’s (MNRE) target of 40GW of rooftop solar solution by 2026, provides large opportunities for our offering, the company said.

Strong automobile sales augur well for company as higher vehicle sales not only help the OEM business but also expand the aftermarkets in years to come.  The demand for lead-acid batteries will remain strong in the foreseeable future for both OEMs and aftermarkets.

In Electric Vehicles (EVs) too, a 12-volt Lead Acid Battery is required to operate lights, audio system, and other equipment, which the company is supplying to EV manufacturers. Therefore, the company does not see any immediate threat to its leadacid battery business.

In 2023, the India Meteorological Department (IMD) has predicted ‘above-normal maximum temperatures’ in most parts of the country, which is expected to drive the demand for inverter batteries, HUPS, and Integra, integrated inverter with lithium-ion technology.

Analysts at ICICI Securities retain BUY rating on Exide following a persistent focus & tangible steps taken towards setting up Li-On cell manufacturing unit in India with initial capacity of 6 GWh to be operationalised in CY25E; healthy orderbook at existing LiIon battery assemble plant & healthy capital efficiency with RoIC >20 per cent plus. The stock however, trading above the brokerage firm’s target price of Rs 230 per share.