Stock Info: Exide Industries Limited

Stock Info: Exide Industries Limited

Shares of Exide Industries Limited (EXL) have clocked strong gains during the last few trading sessions. The stock has been gaining after HDFC Life acquired 100 per cent of the share capital of Exide Life Insurance Company Ltd for Rs 6,687 crore.
 

Out of this, over Rs 725 crore will be paid in cash and the balance by way of issue of over 8.70 crore equity shares at an issue price of Rs 685 per share to holding company Exide Industries Ltd. Once the deal is completed Exide Life Insurance will be merged into HLIC, the process for which will be started after the completion of the acquisition.

 
Exide Industries divested the entire equity shareholding held by the company in Exide Life. While the insurer said that the acquisition is expected to be complete by June 30, 2022, it added that the completion of the acquisition is subject to customary conditions such as receipt of regulatory and other such approvals.
 
As per the share price history, EXL's share on BSE closed at Rs 161.6 on August 30, 2021. It hit an intraday high of Rs 193.65 today. In a week, the stock has delivered 20 per cent return.
 
With a market capitilisation of Rs 16,026 crore, the share stands higher than 5 day, 10 day, 20 day, 50 day, 100 day, and 200 day moving averages.
 
ICICI Direct believes the move is directionally positive and also value accretive for shareholders. However, from a technology standpoint, the underlying battery industry continues to face the increasing challenge of electrification.
 
"While EIL has made investments in this space, we await firmer commitment before turning decisively positive. Our forward numbers are largely unchanged from an operational standpoint. We built exceptional gain (Rs 5,007 crore) on account of this transaction. We value EIL at revised SOTP-based target price of Rs 210 per share," the brokerage house noted.
 
"The acquired company will benefit from HDFC Life's scale, market-leading digital and product innovation capabilities, and prudent risk management strategy, which will help to optimise costs and achieve higher margins over time," said KR Choksey.
 
Motilal Oswal said that Exide Industries Limited would see a lesser impact of lead price inflation on account of its captive smelter. It should have a better mix, owing to a higher Aftermarket share.
 
"The stock trades at 17.2x/13.1x FY22E/FY23E standalone EPS. We cut our P/E multiple to 14x from 15x to account for risk from EVs. Valuing it ~14x standalone Mar'23E EPS + INR25/share for the Life Insurance business, we maintain our Buy rating with a target price of Rs 215 per share," the brokerage house said.
 
According to MarketsMojo, the company has a low Debt to Equity ratio (avg) at -0.22 times. The stock is technically in a Mildly Bearish range and multiple factors for the stock are Bearish like RSI, MACD and KST.
 
However, the stock is trading at a discount compared to its average historical valuations and with an ROE of 11.1, it has an Attractive valuation with a 2.2 Price to Book Value.

Source: https://www.businesstoday.in