Exide stock extended its winning run for 9th straight session, gains 54%; Nomura lifts target price to ₹485
Over the last nine trading sessions (including today), shares of Exide Industries jumped 54%. In a recent note, Japanese brokerage firm Nomura lifted its target price on the stock to ₹485 apiece from an earlier target price of ₹233.
Extending their winning streak for the ninth consecutive session, shares of Exide Industries, a leader in energy storage and management solutions, soared to yet another all-time high, reaching ₹481.70 per share, representing a 4.70% increase. This stellar surge in stock price has resulted in a cumulative gain of 54% over a mere nine trading sessions.
The recent surge in the stock has escalated its one-year return to 148% and its two-year return to nearly 200%. From its lows during the Covid-19 pandemic, the stock is currently trading 264% higher.
The stock initiated its upward momentum on April 08 after the company's wholly owned subsidiary, Exide Energy Solutions, signed a non-binding MOU with Hyundai Motor Company ("Hyundai Motors") and Kia Corporation ("Kia") to explore strategic cooperation opportunities in India's EV market.
This announcement significantly boosted investor sentiment toward the company, as it is expected to generate additional revenue and enhance Exide's market presence in India's growing electric vehicle sector.
Subsequent to this development, brokerage firms have raised the stock price, which further amplified investor sentiment and propelled the stock to unprecedented levels day by day.
In a recent note, Japanese brokerage firm Nomura lifted its target price on the stock to ₹485 apiece from an earlier target price of ₹233. The brokerage continued with its 'buy' rating.
According to the brokerage, EES's partnership with Hyundai and Kia provides significant validation to EXIDE’s cell development, as Hyundai and Kia are already selling EVs in the global market and plan to launch many EVs in India.
"We are now more optimistic about EXIDE’s ability to win new orders from other OEMs. OEMs will need to meet 50% localization for domestic value addition (DVA) to meet PLI (production-linked incentive) norms. The PLI incentive is 15% of the company’s revenue," said Nomura.
First-mover advantage
According to Nomura, the company has been ahead of its peers in announcing its plan to commission its li-ion cell manufacturing plant in Bangalore, Karnataka, by FY25E in partnership with SVOLT Technology Solutions Ltd.
In the first phase of this ₹60 billion project, the plant will have a capacity of 6 GWh (total capacity of 12 GWh; Phase-I is expected to commence by the end of FY25E). EXIDE has already invested ₹20 billion in this entity.
Management commented that the total capex of Phase I will be ₹40 billion, and the rest will be in Phase II. It expects that 70% of total annual li-ion battery demand will come from automotive applications and the rest from industrial applications.
Nomura believes this multi-year technical collaboration with SVOLT will also benefit EXIDE in the long run. SVOLT’s expertise in li-ion cell manufacturing and its existing supply chain should aid EXIDE in scaling up battery production, as per the brokerage. Thus, it believes, Exide is on track with its plan to get the first-mover advantage in the EV battery space.
Strong demand is ahead
The brokerage expects EV penetration in India for 2W/4W to rise from 5%/2% in FY24F to 25%/20% by FY30F. With this, it is estimated that demand for automotive battery cells in India will rise from 12 GWH in FY25F to 90 GWH by FY30F. Industrial segment demand is estimated to rise from 25 GWH in FY25F to 50 GWH in FY30F.
Disclaimer: The views and recommendations given in this article are those of individual analysts. These do not represent the views of Mint. We advise investors to check with certified experts before taking any investment decisions.
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