The Hindu Business Line : Exide Industries revs up

EXIDE Industries has been taking rapid strides on the bourses, with the company's decision to invest in ING Vysya Life Insurance Co acting as the clear trigger. Trading volumes have been moving up in tandem with the price rise, which, investors suggest, underlines a certain degree of accumulation by some sections.

On Thursday, the counter ended at Rs 197.85 on the NSE, a 3-per cent rise from the previous day's close; it reached the day's high at Rs 204. Exide had peaked a few days ago at Rs 220, coinciding with a formal announcement with respect to an investment of over Rs 200 crore for acquiring GMR Industries' stake (49.13 per cent) in the life insurance outfit.

The company's improving stature in the batteries market is an obvious positive, feels marketmen. Says Mr S.B. Ganguly, MD of Exide: "The company is riding on the growth in demand in the automotive replacement market. This demand has just started picking up and will escalate in future. Also, the first quarter has seen a 33-per cent growth in sales of industrial batteries. This is a result of various factors - bank automation, BPO boom, telecom and power".

The company, he added, expects to record a topline growth of 25 per cent in this fiscal. Profitability is likely to scale up by 30 per cent. "This year we will gain from reduction in import duty on lead, a vital raw material, to 5 per cent. Incidentally, lead prices, which were spiralling for more than a year, are now softening", Mr Ganguly observed.

This will not be the end of news flow insofar as Exide's strategic investment in ING Vysya Life (IVL) is concerned, it is felt. The company will make a fresh investment in warrants of IVL, which will be converted into equity.

The counter had bottomed out at Rs 96 (its 52-week low) in August last year, after which it has started moving north. The upside is a fall out of improving fundamentals, market circles feel.

It is also noted that Exide is recording decent trading volumes on the NSE. On Thursday, the exchange saw 1.31 lakh shares, resulting in a turnover of Rs 2.59 crore.

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