Why Exide Industries Share Price is Rising

Editor's note: Exide Industries was the biggest story in the stock market yesterday. The stock was up almost 17%.

Extending gains to the second trading session, Exide shares rallied more than 5% today to touch a fresh 52-week high.

Many analysts have turned positive on the stock recently. But we have been bullish on Exide Industries for quite some time.

In this editorial, published in early January 2024, we explained why the good times could possibly keep rolling for Exide in the coming quarters.

Read on to know more...

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, it's a name synonymous with reliable, long-lasting energy.

But today, Exide isn't just humming along the familiar road, it is roaring headlong into the electrifying future of electric vehicles (EVs) and beyond.

Exide Industry has established itself as the powerhouse of India's battery market, including lithium-ion batteries and energy storage solutions.

It is not only the nation's leading battery manufacturer but also a global player as the world's fourth-largest producer of automotive and industrial lead-acid batteries.

Recently, the shares of this leading EV battery manufacturer have been soaring, hitting record highs.

Here's why...

#1 Subsidiary Investment

The shares of the company touched a record high level after the company invested Rs 400 million (m) in its wholly-owned subsidiary.

The company has invested Rs 400 m in its wholly-owned subsidiary Exide Energy Solution Ltd by subscribing to 12.9 m equity shares with a face value of Rs 10 each at a premium of Rs 21 per share.

After the investment, the total investment in Exide Energy Solutions now stands at Rs 18.2 bn. Under such a purchase, the company's ownership stake in EESL remains unchanged.

Exide Energy Solutions Limited is a 100% subsidiary that specialises in Lithium-ion cell production and has already begun the construction of India's single-site, multi-gigawatt lithium-ion cell manufacturing facility.

#2 Chloride Trademark

In November, battery manufacturer Exide Industries settled a longstanding trademark dispute over the use of the 'CHLORIDE' mark in India.

The High Court of Delhi recorded the terms of a Settlement Agreement reached among the involved parties - Exide Industries Ltd, Vertiv Company Group UK (formerly known as Chloride Group Ltd), and Vertiv Energy India.

Vertiv Company Group UK and Vertiv Energy India acknowledged that the trademark CHLORIDE and its variants in India rightfully belong to Exide Industries.

The agreement explicitly prohibits Vertiv from using the CHLORIDE mark in India, both directly and indirectly, and they must withdraw all claims over the mark in favour of Exide.

This settlement agreement further fuelled positive momentum driving Exide Industries' stock higher.

What Next?

Exide Industries is setting up a lithium-ion cell manufacturing plant in Bengaluru, Karnataka, India. The first phase of the plant is expected to be operational by the end of the next financial year (FY25).

The Bengaluru lithium-ion cell manufacturing venture will be one of the largest in India. The plant is planned in multiple phases, with a total capacity of 12 gigawatt hours (GWh).

This move is aimed at securing an early-mover advantage in the thriving electric vehicle market, with nearly 70% of the anticipated lithium-ion battery demand earmarked for automotive applications. The remainder, around 30%, will cater to industrial usage.

Further, the Indian government is actively promoting the establishment of grid-scale battery storage facilities through its massive Product Linked Incentive (PLI) scheme.

This targets the advancement of lithium-ion cells and other cutting-edge battery technologies.

Additionally, the government's FAME schemes, which offer subsidies to electric vehicle manufacturers and buyers, contribute to the growing demand for lithium-ion batteries in the country. This is further set to boost the company's performance.

Further, a proposed customs duty exemption on the import of capital goods and machinery required for the manufacturing of lithium-ion batteries will also aid the stock.

How Exide Industries Shares have Performed Recently

In the past one year, shares of Exide Industries have gained 78%. In the past five days, Exide Industries is down 9.6%.

Exide Industries has a 52-week high of Rs 326.5 touched on 1 January 2024 and a 52-week low of Rs 170.5 touched on 28 March 2023.

It is currently trading at a PE (Price to Earnings) multiple of 28.2x, while PB (Price to Book) ratio stands at 2.1x.

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.

At present, it has nine manufacturing plants in India with a production capacity of 57 million (m) units of automotive power and five bn units of industrial power.

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

You can also compare Exide Industries with its peers:

Exide Industries vs Amara Raja Batteries

Exide Industries vs Everyday Industries

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Disclaimer: This article is for information purposes only. It is not a stock recommendation and should not be treated as such. Learn more about our recommendation services here...