Recent Price Movement and Market Context
Exide Industries closed at ₹344.35 on 16 January, down by ₹1.10 or 0.32% from the previous session. This decline continues a short-term downward trend, with the stock having fallen by approximately 1.53% over the past three consecutive trading days. Despite this, the stock marginally outperformed its sector, which declined by 3.13% on the same day. However, the stock remains close to its 52-week low, trading just 4.76% above the lowest price of ₹327.95 recorded in the past year.
Technical indicators suggest a bearish sentiment, as Exide Industries is trading below all key moving averages, including the 5-day, 20-day, 50-day, 100-day, and 200-day averages. This technical positioning often signals sustained selling pressure and a lack of short-term momentum.
Underperformance Relative to Benchmarks
Over the last year, Exide Industries has significantly underperformed the broader market. While the Sensex has delivered a positive return of 8.47% over the same period, Exide’s stock has declined by 11.55%. This divergence is notable given the Sensex’s robust performance, highlighting investor concerns specific to Exide. The stock’s year-to-date return also trails the benchmark, down 4.95% compared to the Sensex’s 1.94% decline.
Longer-term performance shows a more positive picture, with the stock delivering an 88.22% gain over three years, outpacing the Sensex’s 39.07% rise. Over five years, Exide’s returns of 72.05% are broadly in line with the Sensex’s 70.43%. Nonetheless, recent trends suggest a loss of investor confidence in the near term.
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Financial Performance and Valuation Concerns
One of the primary reasons for the stock’s recent decline is the company’s weak financial performance. Exide Industries reported disappointing results for the quarter ended September 2025, with profit after tax (PAT) falling by 18.9% to ₹171.94 crore compared to the average of the previous four quarters. Operating profit (PBDIT) also hit a low of ₹391.42 crore, signalling margin pressures or operational challenges.
The company’s return on capital employed (ROCE) for the half-year stood at a low 8.11%, while return on equity (ROE) was just 5.4%. These metrics indicate subpar profitability relative to the capital invested and shareholders’ equity, which may deter investors seeking higher returns.
Despite these weak fundamentals, Exide Industries trades at a premium valuation with a price-to-book ratio of 2. This elevated valuation is expensive compared to peers and historical averages, especially given the company’s subdued growth. Over the past five years, net sales have grown at a modest annual rate of 5.12%, and operating profit has increased by only 7.92% annually, reflecting slow expansion.
Sector and Investor Sentiment
The battery sector, in which Exide operates, has also faced headwinds, with the sector index falling by 3.13% on the day. Investor participation in Exide shares has declined, as evidenced by a 13.39% drop in delivery volume on 14 January compared to the five-day average. This reduced liquidity and waning investor interest may contribute to the stock’s downward pressure.
On a positive note, the company maintains a very low average debt-to-equity ratio of 0.03, indicating a strong balance sheet with minimal leverage. Institutional investors hold a significant 29.34% stake, suggesting that knowledgeable market participants continue to back the company despite recent setbacks.
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Conclusion: Why Exide Industries Is Falling
In summary, Exide Industries’ recent share price decline is driven by a combination of weak quarterly financial results, underwhelming long-term growth prospects, and valuation concerns. The company’s profitability metrics remain subdued, with falling profits and low returns on capital, which have not justified its premium valuation in the eyes of investors. Additionally, the stock’s underperformance relative to the broader market and sector weakness has dampened sentiment.
While the company benefits from a strong balance sheet and institutional backing, these positives have not been sufficient to offset concerns about earnings growth and valuation. The stock’s technical positioning below key moving averages and declining investor participation further reinforce the bearish outlook in the short term. Investors may remain cautious until there is clear evidence of improved financial performance or a more attractive valuation.
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