On BSE, Amara Raja Batteries shares settled at ₹539.55 apiece up by ₹29.50 or 5.78%. The shares were near the intraday high of ₹541.35 apiece - resulting in an over 6% rise in the day. The company's market valuation is currently at ₹9,216.19 crore.
Meanwhile, Exide Industries shares closed at ₹172.45 apiece up by ₹13.10 or 8.22%. The shares were also near the day's high of ₹173.35 apiece - resulting in an 8.8% rise in the day. The company's market cap is around ₹14,658.25 crore.
On the other hand, Sensex was at 59,245.98 higher by 442.65 points or 0.75%. Nifty 50 climbed by 126.35 points or 0.72% and ended at 17,665.80.
Should you buy these battery shares?
Amara Raja Batteries
In Q1FY23, the company registered a consolidated net profit of ₹132.01 crore compared to ₹124.10 crore in Q1FY22. Revenue from operations stood at ₹2,620.53 crore in Q1FY23 against ₹1,886.17 crore in the same quarter last year. The company witnessed robust demand in the automotive sector from the aftermarket as well as 4-Wheeler and 2-Wheeler OEM segments. Industrial battery volumes have shown healthy growth, especially in the UPS and telecom segments.
Amara Raja Batteries is engaged in the Indian lead acid battery market with a strong presence across automotive (OEM, aftermarket) and industrial battery space (UPS, telecom, solar, etc).
Research analyst Nilesh Patil at Chola Wealth said, "Amara Raja Batteries has over the years built a strong franchise for itself in lead acid batteries market with extensive growth in after-market business. In the recent past, the industry-specific headwinds and issues at the company level have weighed on the financial performance. With a revival in automotive demand the company is expected to report improved performance hereon."
"At CMP, the stock trades below its historical average at 13.7x FY23E & 11.6x FY24E. The strong guidance, reviving product demand & inherent growth structure of the company validates the BUY rating on the stock with a target price of ₹700," Patil added.
Exide Industries
During the first quarter of FY23, Exide posted a standalone net profit of ₹226 crore compared to ₹125 crore in Q1FY22. Revenue from operations was at ₹3,899 crore versus ₹2,486 crore in QFY22. EBITDA came in at ₹387 crore against ₹261 crore in Q1 of FY22. The balance sheet remains strong with zero debt and a comfortable liquidity position.
A market leader in storage batteries in India, Exide Industries holds a market share of 60% in the industry. Its segment includes automotive & industrial batteries and it controls 86 percent of the 2W market.
Antu Eapen Thomas, Research Analyst at Geojit said, "Exide has a stronger balance sheet after the divestment of its life insurance business to HDFC Life. The company will be able to maintain its cash position and fund the CAPEX through internal accruals. We remain positive on a medium to long-term basis owing to its concentration on the development of EV batteries and respite in the market price. On a 1 yr. fwd basis, EIL is currently trading at 13.5x (25% lower than its 3yr avg.) near to its all-time low at 12x. We value EIL's at 15x (I yr. avg.) FY24E EPS and recommend Buy rating with a target price of ₹191 per share."
Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint.
