Exide, Amara Raja stocks rise up to 20% in 3 days on positive outlook for battery sector

Battery manufacturers like Exide Industries and Amara Raja Batteries have extended gains on April 9, rallying up to 20 percent in the last three sessions on the back of a combination of partnerships, bullish brokerage calls and robust growth prospects.

On April 9, Exide Industries' shares advanced over 2 percent, a day after the counter rallied 17 percent higher. This comes after South Korean auto majors Hyundai Motor Company (HMC) and Kia Corporation announced a partnership with the homegrown battery maker for electric vehicle battery localisation in the country.

Following the development, JPMorgan has assigned an 'overweight' call on the stock citing that the company's ability to garner partnerships with global OEMs allay investor concerns. Further, more order wins could also be on the cards as Exide continues to be in discussions with several OEMs.

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The global brokerage has increased the valuation of Exide's EV battery business from Rs 25 per share to Rs 172 per share given the increased confidence post the Kia-Hyundai tie up. Not just that, it has further hiked the target price to Rs 480 from Rs 330. The new price target implies an upside potential of 27.3 percent from Rs 377 last the close of April 9.

Similarly, Amara Raja Batteries' share price also spiked about 11 percent in the last three days. "We expect Amara to continue to outpace the organised lead-acid battery industry, led by client acquisitions, product launches, and benefit from its extensive distribution network," said Sharekhan by BNP Paribas in a note.

The brokerage further added that the company has strong long-term revenue visibility, given its focus on the aftermarket segment and its investment in Li-ion battery cell manufacturing will drive its long-term growth. The plant is expected to begin deliveries in FY26. Sharekhan has assigned a price target of Rs 1,052 on account of the expectation of healthy traction in the replacement segment, soft RM cost trends and an opportunity to play in the Li-ion cell business. The stock was trading at Rs 890, higher by 2.5 percent on April 9.

"Amara Raja is gearing up to be a leader by undertaking new business opportunities in the battery space, solar, and motive power, and by expanding capacity and network, along with consolidation in existing areas," analysts at Motilal Oswal said.

However, the declining cost of lithium batteries poses a threat to the Auto and the Industrial Batteries business. E-2Ws/e-3Ws do not require a lead acid battery as an auxiliary battery. This could in turn adversely impact 15-20percent of revenue of lead acid battery players.

At 2:20 pm, the Exide Industry shares were up 385, up 2 percent from the previous close. Amara Raja notched up 3 percent higher to Rs 895, off its day and 52-week high of Rs 920.

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