Buy Exide Industries: target of Rs 229: Sharekhan
Sharekhan is bullish on Exide Industries has recommended buy rating on the stock with a target price of Rs 229 in its research report dated December 16, 2020.
December 17, 2020 / 01:40 PM IST
Sharekhan's research report on Exide Industries
Our interactions with battery dealers reveal strong recovery in two-wheelers replacement demand, while four-wheelers replacement demand and industrial demand are catching up. Dealers are concerned about receiving enough supply to meet demand, especially in the two-wheelers’ battery market. We are of view that higher-than-expected demand from OEMs and shortage of certain imported components have led to supply issues. We maintain our earnings estimates and expect earnings to post a 14.2% CAGR during FY2021E-FY2023E. Valuing Exide’s core business at 10% discount to its 10-year average multiple, we value the company at Rs. 229, providing 18% upside from current levels. The stock is trading at P/Core EPS multiple of 14.5x and EV/EBITDA multiple of 8.8x its FY2023E estimates.
We maintain our Buy rating on Exide Industries Limited (Exide) with a revised PT of Rs. 229, factoring better valuation multiples owing to a better outlook for batteries demand in the automotive sector, driven by increased mobility.
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