Key Reasons Behind Exide Industries Stock Rally & What’s Next?

Curious about why Exide Industries stock is soaring and what comes next? Let’s break down the reasons behind its rally and see what the future holds for investors!

(A) Story So Far

Exide Industries’ shares are on fire, marking their seventh consecutive surge on Monday. Can you believe it? They shot up by a whopping 6.56%, hitting an impressive one-year high of Rs.423.80. And get this, in just seven trading days, they’ve skyrocketed by an incredible 35.16%! 

So, what’s causing all this buzz? 

Well, some factors have propelled the battery maker’s shares from Rs.373 to Rs.485, earning them an overweight rating. Plus, on the technical side, the stock is trading higher than various moving averages, and its 14-day relative strength index (RSI) is at a solid 51.03, signaling a significant uptrend. You know what that means, right? It’s seen as a pretty decent breakout!

If you’re planning to buy the shares of Exide Industries stocks, consider this- experts suggest buying around Rs.380-390 levels, with upside targets of Rs.430-450 in the short term. Exciting, isn’t it?

And get this- just two days ago, a whopping 14.55 lakh shares of Exide Industries stocks were traded on BSE. This was higher than the usual two-week average volume of 9.13 lakh shares. 

With a turnover of Rs.60.09 crore, Exide Industries commands a market capitalization (m-cap) of Rs. 37,663 crore. Now that’s some serious market presence, don’t you think?

Here comes a million-dollar question-

Why Exide Industries stocks are rising exponentially? There are multiple reasons behind it. We will discuss them in the next section!

(B) Reasons behind Exide Industries stock rally

The recent  20% surge in  Exide Industries stock price was triggered by numerous reasons. Let’s discuss them one by one-

(B.1) Morgan Stanley’s Optimistic Views

Morgan Stanley, a foreign brokerage firm, is quite optimistic about Exide Industries’ future. They recently increased their target price on the stock, which caused Exide’s share price to surge by over 6% to a new high for the year, reaching ₹423.80 per share on the BSE.

So, what’s the deal with this optimistic outlook? 

Well, Morgan Stanley reaffirmed their ‘Overweight’ rating on Exide Industries and bumped up their target price to ₹485 per share, previously it was ₹373. They see several growth opportunities for Exide, which could lead to a potential upside of around 22% from the closing price on Friday.

In simpler terms, Morgan Stanley is saying, “Hey, Exide Industries is on the rise!” They’re confident that the company has what it takes to grow, and they believe the stock could go up significantly in the next ten years. This positive news has caught the attention of investors, who are now showing more interest in buying Exide’s shares.

(B.2) Strategic Partnerships with Hyundai and Kia

Recently, Exide made an exciting announcement about its subsidiary, Exide Energy Solutions Ltd. They’ve entered into a non-binding agreement (MoU) with Hyundai Motor Company and Kia Corporation, two major players in the automotive industry. 

What’s the deal? 

Well, they’re teaming up to tackle India’s electric vehicle (EV) market together!

Here’s the scoop- both Exide and Hyundai/Kia will join forces to develop, produce, and supply battery cells specifically for Hyundai’s electric vehicles designed for the Indian market. Essentially, they’re working together to make sure that the batteries needed for these electric cars are made right here in India.

These partnerships are a big deal because they show that Exide is serious about making a mark in the EV scene. By teaming up with Hyundai and Kia, they’re positioning themselves as key players in India’s growing electric vehicle market. 

And you know what? This news isn’t just exciting for Exide—it’s also making investors more confident about the company’s future!

(B.3) Acquisition of Clean Max Arcadia

Last week, Exide Industries bought a 26% ownership share in Clean Max Arcadia Private Ltd. for Rs.5.34 crore.

What does that mean? 

Clean Max Arcadia is all about making solar power, and now Exide has a piece of that action. By investing in Clean Max Arcadia, Exide is showing that they’re serious about renewable energy…

This is a smart move for Exide because it puts them in a good spot in the clean energy game. With Clean Max Arcadia’s focus on generating and providing solar power, Exide is positioning itself as a player in the clean energy sector. It’s like they’re saying, “Hey, we’re not just about batteries anymore—we’re all about green energy too!” 

Here is the cherry on the cake- this move is getting some positive attention from investors who see Exide as a company that can make huge profits in renewable energy.

(B.4) Technical Breakout

For nearly five years, Exide Industries has maintained a consolidation phase, staying below the 300 mark. However, this month, it experienced a breakout with increased trading volumes. Presently, the stock is trending upwards within a positive channel, with indicators signaling a favorable environment for investment. A suggested strategy would be to consider buying with a stop loss set at 296 and a target price of Rs.480.

You know what’s interesting? The Exide Industries stock just experienced something called a “technical breakout” from a pattern called a “Double Bottom.” What does that mean?

Well, imagine the stock’s price chart looks like a “W” shape. Basically, it means that the stock’s price hit a low point, then bounced back up, hit another low point that’s roughly at the same level as the first one, and then bounced back up again. This pattern often signals that the stock’s price might start climbing even higher.

So, why is this a big deal? Well, short-term traders, who keep a close eye on these kinds of technical movements, have noticed this breakout in Exide’s stock. They see it as a sign that the stock might keep rising. That’s why you might notice more people getting involved in buying and selling the stock during this time. This kind of activity can sometimes create even more momentum for the stock, fueling its upward climb.

(B.5) Positive Sentiments

Exide Industries has been on a winning streak lately, thanks to its successful partnerships with global car manufacturers, known as Original Equipment Manufacturers (OEMs). These partnerships have eased investors’ worries, signaling that Exide is on the right track. And the good news doesn’t stop there—Exide is currently in discussions with several other OEMs, which could lead to even more business opportunities in the future.

Adding to the positive sentiment, JPMorgan, a renowned financial institution, has raised its valuation of Exide’s electric vehicle (EV) battery business. It believes Exide’s EV battery business is more valuable than previously thought. We have already discussed this part above!

This vote of confidence from a reputable source is likely to attract more investors and support Exide’s growth trajectory in the EV market.

Thus, these reasons attracted more investors which led to the growth trajectory of Exide Industries in the stock market. 

(C) What’s next?

Following the surge in Exide Industries’ stock price, several key factors will influence its future trajectory. Let’s discuss some of those factors-

(C.1) Partnership Impact

The collaboration with Hyundai and Kia holds promise for Exide Industries, particularly in the electric vehicle (EV) battery segment. While this partnership is a positive development, its immediate financial impact on Exide may be limited in the short to medium term. It will take time for the benefits of enhanced EV battery manufacturing to translate into significant improvements in Exide’s financial performance.

(C.2) Medium-Term Triggers

Exide’s quarterly performance has shown improvement, partly supported by better realizations. Additionally, the implementation of the “China plus one” strategy and potential protectionist measures for the tire industry could act as medium-term catalysts for Exide’s growth. These initiatives aim to strengthen Exide’s position in key markets and diversify its revenue streams beyond traditional sectors.

(C.3) Valuation and Perspective

Despite the recent rally, Exide’s stock is trading at elevated levels. This presents an opportunity for investors to lock in gains. However, it’s essential to exercise caution as valuations are relatively high. Being an investor, you must carefully assess the risk-reward dynamics before making investment decisions!

(C.4) Technical Analysis

From a technical standpoint, Exide’s stock recently reached a fresh 52-week high and broke out from a double-bottom pattern. This suggests that the rally may not be over yet, and there could be further upside potential. Short-term traders may consider buying on dips, with a possible short-term target.

Note: Do you know Exide Industries Limited is one of the biggest battery manufacturers in India? We have discussed the top 10 battery manufacturing companies in India. Go through the article for detailed information.

While the recent rally in Exide Industries’ stock looks encouraging, you must carefully evaluate the balance between short-term gains and long-term potential. It will be interesting to see how Exide Industries can maintain its purple patch in the upcoming days!