Exide Industries, a leading player in the storage battery industry, has been a cornerstone of innovation and reliability for decades. Known for its wide range of products, including automotive batteries, industrial batteries, and solar batteries, Exide Industries caters to various sectors, ensuring uninterrupted power supply and energy storage solutions.
With a strong commitment to technological advancements and sustainability, the company has established a significant presence in both domestic and international markets. As Exide Industries ventures into the promising realm of lithium-ion technology, it aims to solidify its position as a forward-thinking leader in the energy storage industry.
Exide Industries’ recent financial performance has elicited mixed reactions from the market. Despite showing solid growth in net profit and revenue, the stock has experienced a decline. In this article, we’ll explore the company’s latest results, market response, and brokerage insights.
Exide Industries share price movement
Exide Industries share price decline
For the quarter ended June 2023, Exide Industries reported a net profit of ₹224.1 crore, marking a 10.7% increase compared to ₹202 crore in the same period last year. However, the company’s share price fell over 1% in morning trade on July 31 and ended 1.88% lower on July 28.
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Exide Industries share price trend
Despite the positive financial results, Exide Industries’ share price traded in the red, continuing its decline from the previous session. Shares ended 3.54% down at ₹532 apiece on the BSE.
Exide Industries financial performance
Exide Industries revenue growth
Exide Industries’ revenue for Q1FY24 rose by 5.6%, reaching ₹4,245.5 crore from ₹4,021.7 crore year-on-year (YoY). On a standalone basis, the company’s revenue from operations increased by 5.89%, totalling ₹4,312.76 crore from ₹4,072.61 crore YoY.
Exide Industries profit growth
The company’s standalone net profit surged by 15.5% to ₹279.57 crore in Q1FY25 from ₹241.94 crore in the corresponding period last fiscal. This growth in net profit reflects Exide Industries’ strong operational performance.
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Exide Industries EBITDA and margins
Exide’s earnings before interest, taxes, depreciation, and amortization (EBITDA) saw a 13.1% growth, moving up to ₹438.1 crore from ₹387.3 crore YoY. The EBITDA margin expanded by 70 basis points, reaching 10.3% from 9.6% in the previous year.
Standalone EBITDA margins inched up to 11.5% in Q1FY25 compared to 10.6% in Q1FY24.
Exide Industries cost optimization
Despite rising commodity prices, Exide managed to increase its EBITDA by 14.4% during the quarter, supported by revenue growth and cost optimization initiatives. The company also maintained a healthy cash flow and a comfortable balance sheet with zero debt.
Quarterly performance (Amount in Rs Cr):
| Quarterly | Jun 2024 | Mar 2024 | Dec 2023 | Sep 2023 | Jun 2023 |
| Sales | 4,312 | 4,009 | 3,840 | 4,106 | 4,072 |
| Other Income | 14 | 3 | 22 | 39 | 19 |
| Total Income | 4,326 | 4,012 | 3,863 | 4,145 | 4,091 |
| Total Expenditure | 3,944 | 3,618 | 3,527 | 3,749 | 3,759 |
| EBIT | 382 | 394 | 335 | 396 | 332 |
| Interest | 8 | 12 | 14 | 11 | 9 |
| Tax | 94 | 98 | 80 | 97 | 80 |
| Net Profit | 279 | 283 | 240 | 287 | 241 |
Exide Industries investment in lithium-ion technology
Exide Industries lithium-ion investment
Exide Industries is making significant strides in the lithium-ion battery segment. The company invested ₹200 crore as equity in its wholly-owned subsidiary, Exide Energy Solutions (EESL), in Q1FY25, with an additional ₹75 crore invested in July 2024.
EESL focuses on manufacturing lithium-ion cells, packs, and modules for both mobility and stationary applications.
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Exide Industries’ future outlook
Avik Roy, MD and CEO of Exide Industries, expressed optimism about the company’s growth across both automobile and industrial verticals.
Despite rising raw material prices, cost optimization initiatives have led to lower production costs and improved gross margins by nearly 240 basis points YoY. Roy emphasized the company’s focus on maintaining healthy profits over the medium term, even as commodity prices rise.
Exide Industries brokerages’ insights
Kotak Institutional Equities on Exide Industries
Kotak Institutional Equities has maintained a ‘reduce’ rating on Exide Industries, though it raised the target price from ₹190 to ₹225. The brokerage expects Exide to deliver steady performance in the near term but highlights the company’s need to secure orders from OEMs in the EV battery space.
Kotak also points out that profitability in the EV battery segment might be lower due to the dependence on technology from Svolt, which involves a royalty payout.
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Nuvama Wealth Management on Exide Industries
Nuvama Wealth Management has retained a ‘hold’ call on Exide Industries with an unchanged target price of ₹255. Nuvama notes that Exide’s entry into the lithium-ion space with a significant investment of ₹4,000 crore for phase-1 of its cell manufacturing facility is a positive move.
However, they caution that large investments can be return on equity (RoE) dilutive over the next few years.
Exide Industries investment considerations
Exide Industries investment potential
Exide Industries has demonstrated robust financial performance with growth in revenue, profit, and EBITDA margins. However, the market’s lukewarm reaction to the Q1 results and the mixed recommendations from brokerages suggest a cautious approach.
Key takeaways for Exide Industries investors
- Positive Financial Performance: Exide’s net profit and revenue growth, along with improved EBITDA margins, highlight the company’s strong operational performance.
- Market Reaction: Despite positive financial results, the stock has faced a decline, indicating market skepticism or profit-taking by investors.
- Brokerage Recommendations: Mixed views from brokerages with ‘reduce’ and ‘hold’ ratings suggest a cautious approach, with attention to Exide’s ability to secure OEM orders and manage profitability in the EV battery segment.
- Investment in Lithium-Ion: Exide’s significant investment in lithium-ion technology is a long-term growth driver but comes with challenges related to competition and profitability.
Conclusion
Tata Consumer Products Ltd’s Q1 results for FY25 present a mixed picture with strong revenue growth but a decline in net profit. The company’s strategic initiatives and strong performance in branded and non-branded segments highlight its potential for future growth.
Investing in Exide Industries could be a promising move if the company successfully navigates the challenges in the EV battery segment and maintains its growth trajectory. However, it’s essential to stay informed and consult with financial experts to make well-rounded investment decisions.
