Accumulate Exide Industries; target of Rs 520: Geojit Financial Services

Geojit Financial Services research report on Exide Industries

Exide Industries Limited (EIL) is the market leader in storage batteries in India, with a 60% market share. Its segment includes automotive & industrial batteries and it controls 86 percent of the 2W market. Q4FY24 revenue grew by 13.2% YoY, driven by volume growth from most verticals. The automotive aftermarket, UPS, & solar segments continue to witness growth. The order book for lithium ion battery packs is in an incipient stage, with a ramp-up in sales expected during FY25 period. The first phase is expected to commence production by H2FY25. EBITDA margin expanded by 251bps due to lower input costs and a price hike in the replacement market. We expect margins to improve due to the operating leverage benefits accrued from the new plant. Recently, EIL through its subsidiary signed a strategic MOU with Hyundai Motor Co, and Kia Corp. for development, Production and Supply of battery cells (LFP chemistry) for electric vehicle in India.

Outlook

EIL, is focusing on its new energy business to drive future growth. We value EIL on a SOTP basis where core business at 20x on FY26E EPS and Investment in subsidiaries at Rs143/share. Hence, we recommend Accumulate rating at CMP with a target price of Rs 520.