Exide shares at Rs 300 or Rs 540? Stock up 50% in 30 days. Here are price targets

Exide Industries Ltd, whose shares gained 50 per cent in the last one month, reported an in line Q4 results, given weak revenue print was offset by better-than-expected gross margins. Analysts are largely positive on Exide shares due to its focus on EVs with a new lithium cell facility that is likely to start operations from Q4FY25. A few, however, felt valuations for the stock have turned expensive.

Following Exide's Q4 results, Nuvama upped its FY25E earnings per share (EPS) target by 4 per cent on better margin, building in core (lead acid battery) revenue/EPS CAGR of 8 per cent/17 per cent.

"Recently, Exide announced tie-ups with Hyundai/Kia for battery supplies, and is in discussion with several potential customers. Our target price increases to Rs 540 (Rs 370 earlier) as we ascribe 4 times investment value (1 time earlier) to the Lithium battery business, despite slashing the target P/E for the lead acid battery business to 15x (from 18x); retain ‘BUY’," it said.

On the Li-ion business, Nomura India said the battery maker is ahead of most peers in terms of investment in plants, technology partnership (SVOLT) and customer approvals (MOU with Hyundai/Kia).

In addition, OEMs will prioritise localisation over the medium term, which will likely drive offtake for Exide, it said.

"Further, the company is likely to benefit from lower-priced raw material sourcing through SVOLT suppliers and also receive incentives to set up the plant in Karnataka. OEMs may also pay some premium for local sourcing. Moreover, we believe there is a possibility of import duties being imposed on cells in a few years, which may support medium-term margins," it said. This brokerage has a target price of Rs 485 on Exide Industries.

Kotak Institutional Equities said while Exide is well-positioned to benefit from growing demand for LiB, the profitability and return ratios could be under pressure due to higher capex requirements, evolution of business from B2C to B2B, where pricing power is limited and commoditised nature. Kotak retained its 'SELL' on the stock due to expensive valuations," .

The brokerage, which has a fair value of Rs 300 for Exide Industries, said  the company may deliver steady performance in the near term, led by steady growth in the lead acid business and improvement in profitability.