Why Exide Industries Share Price is Rising

For over 75 years, Exide Industries has been the beating heart of India's battery market.

From powering the first sputtering rickshaws to the purring engines of modern sedans, Exide has established itself as the powerhouse, with its recent work towards lithium-ion batteries and energy storage solutions in full force.

Recently, shares of the company have been soaring, hitting record highs.

Yesterday, Exide Industries share price rallied over 15% to touch a new high of Rs 384.

Here's why...

Partnership with Hyundai and Kia

The big spike in shares of the EV battery maker yesterday came after one of the company's subsidiaries joined hands with South Korean auto majors Hyundai Motor Company (HMC) and Kia Corporation for electric vehicle battery localisation in India.

Exide Energy Solutions (EES) is a wholly-owned subsidiary of Exide Industries.

With this partnership, Hyundai Motor and Kia aim to localise their EV battery production, specifically focusing on lithium-iron-phosphate (LFP) cells in line with the expansion of their EV plans for the Indian market.

Hyundai Motor Group said this strategic cooperation with Exide Energy is the beginning of HMC and Kia's efforts to expand their exclusive battery development, production, supply and partnerships in the Indian market.

Strong Growth Prospects

At present, India majorly imports lithium-ion batteries for electric vehicle (EV) production.

However, the government is encouraging domestic production of these batteries through policies such as Faster Adoption and Manufacturing of (Hybrid &) Electric Vehicles (FAME II) scheme and the Production-Linked Incentives (PLI) scheme.

After announcing these schemes, several foreign companies including Tesla, and VinFast have expressed interest to set up factories in India.

The government's focus on electrification of India's vehicle fleet by 2030, growing need for sustainable and cleaner alternatives to fuel vehicles, India's robust supply chain and thriving battery manufacturing industry makes the country a potential preferred supplier for global companies.

What Next?

Exide is in the process of setting up a plant for lithium-ion cell production and a plant to manufacture absorbent glass mat (AGM) batteries with a capex of around Rs 40 bn.

This is its most ambitious project, and the work is on in full swing.

Despite such high capex plans, the company has sufficient cash balance to meet the capex requirements comfortably.

Moreover, the company has a clear advantage as it has a bigger manufacturing capacity compared to Amara Raja's.

This gives Exide an edge over Amara Raja and other competitors as it can manufacture a higher number of units.

To add to this, the company also has a leading position in the replacement market, making it a top player in the industry.

The company is one of the early movers in the first 70% of the value chain where it will start manufacturing lithium-Ion cells as well.

This will add another revenue stream to the company's overall business and may prove to be a key growth driver going forward.

Over the years, Exide has posted strong numbers, but growth has remained a challenge, especially on the bottomline front.

Financial Snapshot

Rs m, consolidated	FY19	FY20	FY21	FY22	FY23
Net Sales	147,209	144,710	103,594	127,892	150,782
Growth (%)	15%	-2%	-28%	23%	18%
Operating Profit	16,014	15,195	14,288	14,654	17,181
OPM (%)	11%	11%	14%	11%	11%
Net Profit	8,456	7,768	8,099	43,669	8,227
Net Margin (%)	6%	5%	8%	34%	5%
ROE (%)	14.7	12.1	10.7	7.8	7.6
ROCE (%)	23.4	17.0	14.8	11.3	11.0
Dividend (Rs)	2.4	4.1	2.0	2.0	2.0
Debt to Equity (x)	0.0	0.0	0.0	0.0	0.0

Data Source: Ace Equity

From a valuation perspective, while the average PE over the last 10 years for Exide has been around 20x, it is currently available at a PE ratio of around 33x.

This means there is more than 50% premium with no significant growth in earnings to show for it.

How Exide Industries Share Price has Performed Recently

In the past 5 trading sessions, Exide Industries share price is up 20%.

Most of the gains came in yesterday's session as shares rallied over 17%, registering one of their best days.

Exide Industries has a 52-week high of Rs 384 touched on 8 April 2024 and a 52-week low of Rs 179 touched on 10 April 2023.

In the past one year, Exide shares are up 107%.

Here's a table comparing Exide with its peers -

Comparative Analysis

Company	Exide Industries	Amara Raja	Eveready Ind	HBL Power	Indo-National
ROE (%)	7.6	14.1	9.1	10.8	-3.4
ROCE (%)	10.9	19.6	13.5	14.1	0.9
Latest EPS (Rs)	10.3	44.4	6.1	8.5	6.2
TTM PE (x)	36.8	19.6	58.8	59.4	103.9
TTM Price to book (x)	2.5	2.7	6.9	12.2	2.1
Dividend yield (%)	0.5	0.7	0.0	0.1	0.8
Industry PE	30.9
Industry PB	3.1

Data Source: Ace Equity, Equitymaster

About Exide Industries

Exide Industries is an India-based storage battery company. The company's segments include storage batteries and allied products.

The company is engaged in manufacturing storage batteries for the automotive, industrial, and submarine sectors.

With over 75 years of experience, the company leads the battery market in India. It caters to all top original equipment manufacturers (OEM), including Tata Motors, Maruti, and Bajaj.

Apart from a strong domestic presence, it has an international presence in the USA, Canada, and Gulf Corporation Council (GCC) countries.

For more details, see the Exide Industries company fact sheet and quarterly results.

You can also compare Exide with its peers:

Exide Industries vs Amara Raja Batteries

Exide Industries vs Everyday Industries

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