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LKP Securities
Exide Ind (Buy)
Target: ₹233
CMP: ₹196.00
Exide Industries, the bellwether of Indian automotive and industrial battery manufacturing industry, is well-poised to take advantage of the blooming replacement market demand within automotive, telecom and inverter batteries. The company is consistently gaining market share on the auto replacement side of the business through exit of various unorganised players during pandemic. With the replacement nature of the product, battery volumes are expected to surge in the near- to mid- term, for which the company has already ramped up its capacities . On the OEM side of the business, the company with more than 60 per cent market share has gained single source vendor position with various best selling new models. On the industrial side of the business, the company is re-enforcing its status as the No 1 manufacturer of inverter batteries and gaining healthy market share in the telecom segment as well.
With strong initiatives on cost savings, we envisage clear improvement in margins hereon. Company’s first mover advantage on the lithium ion battery joint venture and investments in it shall enable them to ride the EV wave. Reduced capex and restriction of investments in insurance arm will lead to strong FCF over the coming years.
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