Valuation Metrics and Market Context
Exide Industries currently trades at ₹359.25, slightly below its previous close of ₹363.60. The stock’s 52-week trading range spans from ₹327.95 to ₹466.45, indicating a broad price movement over the past year. The latest valuation assessment categorises the stock as expensive, a shift from its prior classification as very expensive. This change is primarily driven by the P/E ratio, which stands at 38.72, and the price-to-book value at 2.07. These figures suggest that while the stock remains priced at a premium, the degree of premium has moderated relative to earlier periods.
Other valuation multiples provide additional context. The enterprise value to EBITDA (EV/EBITDA) ratio is recorded at 17.60, while the enterprise value to EBIT (EV/EBIT) ratio is 26.39. These multiples, alongside an EV to capital employed ratio of 2.02 and EV to sales at 1.80, offer a comprehensive view of the company’s valuation from different financial angles. The PEG ratio remains at zero, reflecting the absence of a meaningful growth adjustment in the valuation.
Comparative Performance and Returns
When analysing Exide Industries’ stock returns against the broader Sensex index, the company’s performance over recent periods has diverged notably. Year-to-date, Exide Industries has recorded a return of -13.8%, contrasting with the Sensex’s positive 8.12% return. Over the past year, the stock’s return was -19.22%, while the Sensex gained 5.36%. However, looking at longer horizons, Exide Industries has outperformed the Sensex over three and five years, with returns of 89.53% and 88.83% respectively, compared to the Sensex’s 37.73% and 79.90%. Over a decade, the Sensex leads with a 231.05% return against Exide’s 147.59%.
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Return on Capital and Dividend Yield Insights
Exide Industries’ return on capital employed (ROCE) is currently 7.64%, while the return on equity (ROE) stands at 5.36%. These figures provide insight into the company’s efficiency in generating profits from its capital base and shareholder equity. The dividend yield is modest at 0.56%, reflecting a conservative distribution policy relative to the stock price. These metrics, combined with valuation multiples, contribute to the overall assessment of the stock’s investment appeal.
Price Movement and Daily Trading Range
On the trading day under review, Exide Industries experienced a day change of -1.20%, with the stock price fluctuating between a low of ₹357.35 and a high of ₹363.55. This intraday movement aligns with the broader market volatility observed in the Auto Components & Equipments sector, which has faced headwinds amid shifting economic conditions and supply chain challenges.
Sector and Industry Positioning
Operating within the Auto Components & Equipments sector, Exide Industries is positioned among peers that have also seen valuation adjustments in recent months. The sector’s dynamics, influenced by automotive demand cycles and raw material cost pressures, have contributed to a reassessment of price multiples across the board. Exide’s current valuation metrics, while elevated, are reflective of sector trends and investor sentiment towards companies with established market presence and product portfolios.
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Historical Valuation Context
Historically, Exide Industries has traded at varying valuation levels, influenced by market cycles and company-specific developments. The current P/E ratio of 38.72 is lower than levels observed during periods of heightened investor enthusiasm but remains above the broader market average. Similarly, the price-to-book value of 2.07 indicates a premium over the company’s net asset value, consistent with expectations for a firm with established brand equity and market share.
Investor Considerations Amid Valuation Changes
The recent revision in Exide Industries’ evaluation metrics invites investors to reassess the stock’s price attractiveness in the context of both short-term market fluctuations and long-term fundamentals. While the stock’s valuation remains on the higher side relative to some peers, the moderation from very expensive to expensive suggests a potential recalibration of expectations. Investors may weigh these valuation parameters alongside operational performance indicators and sector outlooks to inform their decisions.
Conclusion
Exide Industries’ valuation adjustment reflects a nuanced shift in market assessment, balancing premium pricing with evolving sector dynamics and company fundamentals. The stock’s performance relative to the Sensex over multiple timeframes underscores the importance of a long-term perspective when analysing investment opportunities. As valuation parameters continue to evolve, market participants will likely monitor Exide Industries closely to gauge its positioning within the Auto Components & Equipments sector and broader market environment.
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