This battery maker doubles investors money in 6 months; technicals hint at further upside

Shares of Exide Industries in Tuesday’s trade marked their all-time high after rallying over 8 per cent in intra-day trade. Nonetheless, at the last count, it traded higher by over 3 per cent at Rs 591.30 per share on the BSE.

Earlier in June the company in an exchange filing said that it has invested around Rs 75 crore in its wholly-owned subsidiary Exide Energy Solutions Limited (EESL) on rights basis.

Atul Parakh, CEO of Bigul noted that the company’s recent share price surge can be directly linked to its strategic investment of Rs 75 crore in its lithium-ion battery subsidiary, Exide Energy Solutions Limited. This significant capital injection is a clear signal of Exide's commitment to capturing a larger share of the rapidly expanding lithium-ion battery market. 

Lithium-ion batteries are a critical component for electric vehicles and renewable energy storage solutions, both sectors with strong tailwinds due to government initiatives and increasing environmental consciousness

By prioritising lithium-ion technology, Exide is positioning itself to capitalise on the anticipated surge in demand for these batteries, Parakh added.

Parakh further added that this move aligns perfectly with the Indian government's strong push for electric vehicle adoption. Also with Exide being a major player in the traditional lead-acid battery market, this strategic investment demonstrates their ability to adapt and thrive in the evolving energy landscape. 

The positive investor sentiment surrounding the future of lithium-ion technology, coupled with Exide's proactive approach, is likely driving investor confidence and propelling the stock price.

Aamar Deo Singh, Sr. Vice President, Research, Angel One remarked that the company has proven to be a multi-bagger for its investors, with the stock rallying by over 400% in the past 2 years, on the back of strong fundamentals and future growth prospects.

The company has a sales growth of ~17% per annum over the past 3 years, whereas profit growth for the same period was seen at ~10% per annum. 

The company is heavily investing in its lithium-ion cell manufacturing plant, with a planned outlay of Rs.5000 crores. Further, its tie-ups with China-based SVOLT Energy Technology & Hyundai motors, all bode for the company's growth in the future. 

Technicals also hint at further upside

Avdhut Bagkar, Derivatives & Technical Analyst at StoxBox said while the price action is trading in the overbought category of the Relative Strength Index (RSI), selling pressure is unable to halt the upward momentum. Going forward, until the support of 550 is protected on the closing basis, the price action is anticipated to scale higher levels in the following sessions. The overall trend signals a move to 650 and 675 levels, he added.

Singh added that the stock is currently trading around a P/E of 56, indicating that investors should ideally wait for a correction to enter into the stock. The stock has strong support around the 440-460 zone whereas immediate resistance is seen around the 620-650 mark.