On Monday, two battery stocks in the midcap basket beat benchmarks during a strong market rise. Amara Raja Batteries and Exide Industries were the two stocks in question. Both have risen by 6 to 9% in just one day. The benchmark Sensex and Nifty 50 both increased by more than 0.7% during the day. These two stocks might get further momentum in the future. Experts have high hopes for these stocks.

Shares of Amara Raja Batteries closed at ₹539.55 on the BSE, up ₹29.50 or 5.78%. The shares were close to the intraday high of ₹541.35 a share, resulting in a day-high gain of more than 6%. The market value of the firm is approximately ₹9,216.19 crore.

Exide Industries’ shares, meanwhile, increased by ₹13.10 or 8.22% to close at ₹172.45 per share. The shares were also close to the day’s high of ₹173.35 a share, which led to an increase of 8.8% for the day. The market value of the firm is around ₹14,658.25 crore.

On the other side, the Sensex was up 442.65 points, or 0.75%, at 59,245.98. The Nifty 50 reached 17,665.80 after increasing by 126.35 points or 0.72%.

Should you buy these battery shares?

Amara Raja Batteries Share Price Target

The business reported a consolidated net profit of ₹132.01 crores in Q1FY23 as opposed to ₹124.10 crores in Q1FY22. In Q1FY23, operating revenue totaled ₹2,620.53 crore, compared to ₹1,886.17 crore in the same quarter previous year. The firm observed significant demand from the aftermarket as well as the 4-Wheeler and 2-Wheeler OEM segments in the automobile industry. Industrial battery volumes have shown healthy growth, especially in the UPS and telecom segments.

Amara Raja Batteries is active in the Indian lead acid battery business and has a significant presence in the industrial battery and automobile (OEM, aftermarket) markets (UPS, telecom, solar, etc).

“Amara Raja Batteries has over the years built a strong franchise for itself in the lead acid batteries market with extensive growth in after-market business,” said research analyst Nilesh Patil at Chola Wealth. “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 going forward.”

With a target price of ₹700, Patil continued, “At CMP, the stock trades below its historical average at 13.7x FY23E and 11.6x FY24E. The robust guidance, recovering product demand, and intrinsic growth structure of the firm underpin the BUY recommendation on the stock.”

Exide Industries Share Price Target

Exide reported a standalone net profit of ₹226 crores in the first quarter of FY23 as opposed to ₹125 crores in Q1FY22. In comparison to QFY22, operating revenue went up to ₹3,899 crore from ₹2,486 crore. EBITDA increased to ₹387 crores from ₹261 crores in the first quarter of FY22. The financial sheet is still robust, with no debt and adequate liquidity.

Exide Industries is the industry leader in storage batteries in India, with a market share of 60%. Automotive and industrial batteries are included in this section, and it holds 86 percent of the 2W market.

Research Analyst at Geojit, Antu Eapen Thomas, said: “After selling its life insurance division to HDFC Life, Exide has a healthier balance sheet. The business will be able to keep its cash balance while funding the CAPEX using internal accruals. We continue to be optimistic on a medium- to long-term basis because of its focus on EV battery research and the market pricing relief. EIL is presently trading at 13.5x on a 1 year forward basis, which is close to its all-time low of 12x and 25% below its 3 year average. We suggest a Buy rating and a target price of ₹191 per share for the EIL’s, which we value at 15x (I year’s average) FY24E EPS.”