Exide Industries Valuation Shifts to Fair; P/E and P/BV Signal Improved Price Attractiveness

Valuation Metrics and Recent Grade Upgrade

As of 1 Feb 2026, Exide Industries Ltd trades at ₹321.50, marginally above its previous close of ₹320.65. The stock’s 52-week high stands at ₹430.85, while the low is ₹313.00, indicating a significant correction from its peak levels. The company’s P/E ratio currently sits at 32.81, a figure that, while still elevated relative to broader market averages, marks a decline from historically higher valuations that had previously labelled the stock as expensive.

Similarly, the price-to-book value ratio has moderated to 1.86, suggesting that the market is now pricing the company closer to its net asset value than before. This shift has prompted a valuation grade change from ‘expensive’ to ‘fair’, signalling a more balanced risk-reward profile for potential investors.

Other valuation multiples such as EV to EBITDA at 15.56 and EV to EBIT at 23.24 remain on the higher side, reflecting the capital-intensive nature of the auto components sector and the company’s operational leverage. The PEG ratio, a measure of price relative to earnings growth, is elevated at 6.49, indicating that the stock’s price growth is not fully supported by earnings growth expectations.

Financial Performance and Return Ratios

Exide’s return on capital employed (ROCE) stands at 7.64%, while return on equity (ROE) is 5.36%. These figures are modest and below the levels typically favoured by growth-oriented investors, which partly explains the cautious stance reflected in the Mojo Grade of ‘Sell’ with a score of 41.0. This is an improvement from the previous ‘Strong Sell’ rating issued on 22 Dec 2025, indicating some stabilisation in fundamentals but still signalling limited upside potential.

The company’s dividend yield remains low at 0.62%, which may deter income-focused investors seeking steady cash flows. The market cap grade of 2 further underscores the mid-cap status of Exide Industries, which often entails higher volatility and sensitivity to sectoral trends.

Stock Performance Relative to Sensex

Examining Exide’s stock returns relative to the benchmark Sensex reveals a mixed picture. Over the past week, the stock declined by 1.14%, contrasting with a 0.90% gain in the Sensex. The one-month and year-to-date returns are notably negative at -10.15% and -11.26% respectively, while the Sensex posted more modest declines of -2.84% and -3.46% over the same periods.

Over longer horizons, Exide has outperformed the Sensex over three years with an 82.20% gain compared to the index’s 38.27%. However, over five and ten years, the stock’s returns of 66.19% and 167.36% lag behind the Sensex’s 77.74% and 230.79%, respectively. This suggests that while the company has delivered strong medium-term growth, it has struggled to keep pace with broader market gains over extended periods.

Sector Context and Peer Comparison

Operating within the Auto Components & Equipments sector, Exide Industries faces competitive pressures and cyclical demand patterns influenced by the automotive industry’s health. Its valuation multiples, particularly the P/E of 32.81 and EV/EBITDA of 15.56, are broadly in line with sector averages, which tend to be elevated due to the capital-intensive nature and growth prospects of the industry.

However, the company’s relatively low ROE and ROCE compared to some peers suggest operational challenges or margin pressures that may be weighing on investor sentiment. The PEG ratio of 6.49 further indicates that earnings growth expectations are not robust enough to justify the current price levels fully.

Investors should weigh these factors carefully against sector trends and the company’s strategic initiatives, such as product innovation or cost optimisation, which could improve profitability and valuation metrics over time.

Market Sentiment and Rating Evolution

MarketsMOJO’s recent upgrade of Exide Industries’ Mojo Grade from ‘Strong Sell’ to ‘Sell’ on 22 Dec 2025 reflects a cautious optimism. The score of 41.0, while still below the threshold for a ‘Hold’ or ‘Buy’, indicates that some negative pressures have eased, possibly due to stabilising earnings or improved market conditions.

Nevertheless, the overall sentiment remains subdued, with valuation parameters suggesting limited margin of safety for new investors at current price levels. The modest dividend yield and middling return ratios further temper enthusiasm, signalling that the stock may be more suitable for risk-tolerant investors with a longer-term horizon.

Investor Takeaway and Outlook

Exide Industries Ltd’s transition from an expensive to a fair valuation grade marks a significant development in its investment profile. While the stock’s P/E and P/BV ratios have moderated, they remain elevated relative to historical averages and some sector peers, reflecting ongoing concerns about earnings growth and return ratios.

Investors should consider the company’s modest dividend yield and middling profitability metrics alongside its recent stock performance, which has lagged the Sensex over short and medium terms. The upgrade in Mojo Grade to ‘Sell’ suggests that while the worst may be behind, the stock is not yet positioned for a strong rebound.

Given these factors, a cautious approach is warranted. Investors seeking exposure to the auto components sector might explore alternatives with stronger fundamentals or more attractive valuations, while those holding Exide should monitor upcoming earnings reports and sector developments closely.

Conclusion

Exide Industries Ltd’s valuation adjustment signals a recalibration in market expectations, offering a more balanced but still cautious investment proposition. The company’s fair valuation grade, combined with modest returns and a subdued dividend yield, suggests limited near-term upside. However, the recent improvement in rating from ‘Strong Sell’ to ‘Sell’ indicates potential stabilisation, making it a stock to watch rather than a definitive buy at this stage.

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