Buy Exide; target of Rs 215: Motilal Oswal

Motilal Oswal's research report on Exide

Exide (EXID)’s 3QFY23 revenue growth was below our estimate largely led by weaker mix. Softening lead prices benefitted gross margin but operating deleverage restricted margin expansion. We, however, expect a sustained recovery, fueled by OEM production and after-market growth, with a continuous shift from the unorganized to the organized segment. However, disruption from new chemistries is evolving at a much faster face and will influence both auto and industrial businesses. We raise our FY23E EPS to factor in the benefit from benign RM costs thus aiding margins while maintaining our FY24E EPS.

Outlook

Valuing the stock at ~12x standalone Dec’24E EPS + INR36/share for a stake in HDFC Life Insurance (@ 40% Holdco discount), we retain our BUY rating with a TP of ~INR215.

For all recommendations report, click here