Exide Industries shares zoom 17%; hit 52-week high; here’s why

Kolkata-based battery major Exide Industries Ltd shares zoomed 17% on Monday after auto majors Hyundai Motor Company and Kia Corporation signed a memorandum of understanding (MOU) with its subsidiary (Exide Energy Solutions) for strategic cooperation with it as part of their electric vehicle (EV) expansion plans.

Hyundai Motor and Kia, as part of their EV expansion plans for the Indian market, aim to localise EV battery production, focusing on lithium-iron-phosphate (LFP) cells. The companies say the move could position them as the "pioneers" in applying domestically produced batteries in upcoming EV models in the Indian market.

“India is a key market for vehicle electrification due in part to the government’s carbon neutrality goals, which makes securing cost competitiveness through localised battery production crucial,” said Heui Won Yang, president and head of Hyundai Motor and Kia’s R&D Division. “Through this global partnership with Exide Energy Solutions Ltd., we will gain a competitive advantage by equipping Hyundai Motor and Kia’s future EV models in the Indian market with locally produced batteries.”

Exide Industries Ltd, on the other hand, has over 75 years of experience and market leadership in lead-acid batteries. Exide Energy Solutions, its wholly owned subsidiary, was formed in 2022 to focus on the making of lithium-ion cells, modules and packs incorporating a portfolio of multiple chemistries and form factors.

Shares of Exide Industries opened at ₹323.05 on the BSE, up from ₹321.70 during the previous session. However, the share picked up the pace during the latter half of the trading session and hit intra-day and 52-week highs of ₹383.50, up 17%. At the current share price i.e. ₹375.05, the scrip is trading up 16.58%, taking the company's m-cap to ₹31,879.25 crore.

Exide Industries shares have given more than double the return in the past year, surging 106.87%. In the calendar year, the scrip has seen a 16.57% surge. In the past six months and one month, the Exide Industries share has surged 47.16% and 16.21%, respectively.

Brokerage ICICI Securities, in its last month's coverage report on the stock, assigned a 'BUY' rating to Exide Industries, saying it is the early one to take tangible steps in the new age Li-On battery business, thereby addressing the risk of EV transition at its base business.

"We value EIL at SOTP-based target price of ₹400 (₹280 for base business at 17x FY26E EPS, ₹75 for investments, stake in subsidiary and 1x CWIP - Li-On Cell Plant in FY26E)," says Exide.

The company also reported steady performance in Q3 FY24. On a standalone basis, its topline came in at ₹3,841 crore, up 12.8% YoY. EBITDA in Q3 FY24 stood at ₹440 crore, with EBITDA margins at 11.5% (down 30 bps QoQ). PAT in Q3 FY24 stood at ₹240 crore (up 8% YoY). 

Notably, the country is rapidly emerging as a "critical player" in the production and sales of EVs. Realising the strategic importance of the Indian market, Hyundai Motor and Kia have introduced their EV models to take the early lead.

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