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Exide Industries shares zoom on insurance subsidiary sale. Should you buy?

This deal will help Exide Industries to launch its most awaited lithium battery and hence the stock is expected to remain bullish from short-term to long-term. (Mint)Premium
This deal will help Exide Industries to launch its most awaited lithium battery and hence the stock is expected to remain bullish from short-term to long-term. (Mint)

  • According to stock market experts, it's good news for Exide Industries promoters as they have managed to crack a deal with HDFC Life Insurance Company, where they will get both cash and equity from HDFC Life

Exide Industries share price today shot up to the tune of 14 per cent after the company's communication with Indian exchanges in regard to 100 per cent divestment in its insurance subsidiary Exide Life Insurance. According to stock market experts, it's good news for Exide Industries promoters as they have managed to crack a deal with HDFC Life Insurance Company, where they will get both cash and equity from HDFC Life. This will help Exide Industries to launch its most awaited lithium battery and hence the stock is expected to remain bullish from short-term to long-term.

Speaking on the reason for Exide Industries share price rise; Avinash Gorakshkar, Head of Research at Profitmart Securities said, "HDFC Life Insurance is going to acquire Exide Life Insurance, a subsidiary of Exide Industries. In this deal, Exide Industries will not only get 726 crore cash, their promoters will be given 8,70,22,222 HDFC Life shares at an issue price of 685 per equity share. The company will be able to use this cash for reducing its debt and launching much awaited lithium battery. Apart from this, HDFC Life shares allotted to Exide Industries promoters will increase the investment value in company's financials. So, Exide Industries shares are expected to remain bullish from short-term to long-term."

Avinash Gorakshkar of Profitmart Securities said that Exide-HDFC Life deal is positive for both companies as Exide is getting both cash and shares from HDFC Life while HDFC Life will get the clientele of Exide Life Insurance for its future business.

Advising Exide Industries share holders to hold the counter for further gains; Mudit Goel, Senior Research Analyst at SMC Global Securities said, "One needs to avoid fresh buying at current levels but those who hold the counter should maintain their position with trailing stop loss at 184 per equity share. The stock may soon go up to 207." He said that once the stock manages to break this 207 hurdle, it will become highly bullish and then fresh buying can be initiated.

Exide Industries management informed about its 100 per cent equity sale in Exide Insurance to the Indian exchanges. The BSE informed about the communication citing, "This is to inform that Board of Directors of Exide Industries Limited (Company) at its meeting held today, has considered and subject to the approval of its shareholders, approved the divestment of the Company's entire equity shareholding in Exide Life Insurance Company Limited, a material wholly owned subsidiary of the Company, by way of sale to HDFC Life Insurance Company Limited."

Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint.

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