Exide Industries Stocks: Exide Industries has strong growth prospects: Why it is this week’s stock pick – The Economic Times

Clipped from: https://economictimes.indiatimes.com/wealth/invest/exide-industries-has-strong-growth-prospects-why-it-is-this-weeks-stock-pick/articleshow/94112153.cms

SynopsisHigher government and private spending on infrastructure projects, increase in auto sales and expansion in overseas markets will boost Exide Industries’ growth.

Helped by an improved performance of the auto and industrial segments, storage battery manufacturer

Exide Industries

reported strong revenue growth of 57% y-o-y in the first quarter of 2022-23. The performance of the automobiles batteries segment was driven by replacement demand and improved two-wheeler and four-wheeler battery sales, while the growth in the industrial batteries segment was supported by rise in I-UPS, solar, and power projects.

Though the EBITDA margins declined in the first quarter due to continuing cost pressures, these are expected to ease as the benefits of lower commodity prices will start reflecting in the second quarter. Analysts remain confident about the company’s growth prospects for several reasons.

First, automobile sales are expected to reach pre-covid levels in 2022-23, supported by stabilisation of semi-conductor supply chain issues, improvement in consumer sentiments and increased infra spending. Increase in auto sales will benefit

Exide

as it will boost replacement demand and increase automotive battery demand from OEMs. Also, the company’s foray into lithium cell manufacturing provides strong growth opportunities, driven by increasing traction for hybrid and electric vehicles (EV) in India.

Second, in industrial batteries, the I-UPS or industrial uninterrupted power supply segment is expected to grow in double digits in 2022-23, supported by higher government and private spending on infra projects. Healthcare, education and real estate are expected to drive I-UPS sales in the future. The solar battery segment is also showing good momentum. Many new projects are expected to be executed in 2022-23 across various infra segments, such as power generation, railway and oil pipelines, which will boost demand for batteries. The traction business segment is also gaining momentum due to India’s warehousing boom.

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Third, the company has a strong technology profile and plans to launch batteries that have efficient charging capabilities. Exide is also engaged in developing green manufacturing solutions/processes that aim at energy optimisation by emitting zero or minimal effluents.

Fourth, the company is focusing on import substitution of raw materials and undertaking cost-control measures, such as backward integration, diversifying supplier base, increasing automation and enhancing digital initiatives.

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Fifth, the company has witnessed growth in market penetration in Spain, Germany, West Asia, Southeast Asia, Australia, South Africa and the UK. It has also begun exports into new markets like France and South Korea.

Selection methodology: We pick the stock that has shown the maximum increase in ‘consensus analyst rating’ during the past month. The consensus rating is arrived at by averaging all analyst recommendations after attributing weights to each of them (5 for strong buy, 4 for buy, 3 for hold, 2 for sell and 1 for strong sell) and any improvement in consensus analyst rating indicates that the analysts are getting more bullish on the stock. Only stocks with at least 10 analysts covering them are considered. You can see similar consensus analyst rating changes during the past week in ETW 50 table.
(Originally published on Sep 12, 2022, 06:30 AM IST)

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