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Exide Industries Ltd

| Q4 & FY26 Earnings Conference Call

NEUTRAL SENTIMENT

Report Source

⬤11th May 26

Summary : Exide Industries delivered strong Q4 FY26 results driven by domestic demand and cost management, while aggressively investing in lithium-ion manufacturing amidst commodity price volatility.

Management Perspective positive : The outlook for the lead-acid business remains positive across most businesses. We have been able to deliver a growth which normally is in line with the expectation, both in top line and bottom line.

Concall Report Analysis & Insights

Business Overview

  1. Q4 FY26 revenue grew 9.4% year-on-year, with domestic sales up 12.5%.
  2. Full year FY26 revenue growth was 4.1%, with 92% of business growing double-digits.
  3. EBITDA margin maintained at 11.7% in Q4 due to strong volume growth and cost control.
  4. Key verticals like 2-wheeler/4-wheeler OEM, home UPS, and solar showed double-digit growth.
  5. Solar vertical crossed Rs. 1000 crore mark for the full year.

Future Growth Prospects

  1. Lithium-ion cell manufacturing project has seen Rs. 4802 crores total equity investment.
  2. Cylindrical lines for lithium-ion are starting customer sample delivery this month.
  3. Prismatic lines for lithium-ion will initiate product trials shortly.
  4. Outlook for the lead-acid business remains positive across most segments.
  5. Company expects to increase export share as geopolitical tensions ease.

Management Insights

  1. The 'One-Exide' operating model has enhanced agility and customer focus.
  2. Management is focused on tight cost control to mitigate global headwinds.
  3. Price increases have been implemented in tranches to pass on commodity inflation.
  4. The company is working with the government for subsidies and incentives for localization.
  5. OEMs are increasingly looking for local supply chain development for batteries.

Signs of Skepticism

  1. Management acknowledges commodity price volatility makes future lithium-ion profitability hard to predict.
  2. Specifics on future lithium-ion revenue and margin metrics are not yet disclosed.
  3. The exact timeline for significant revenue recognition from cell manufacturing is still uncertain.
  4. Government support for 'Make in India' cells is desired but not yet fully defined.

Risk Factors

  1. West-Asia conflict remains an ongoing threat, impacting commodity availability and pricing.
  2. Rapidly increasing commodity rates and rupee depreciation pressurize input costs.
  3. Geopolitical tensions continue to impact the Exports business.
  4. Uncertainties in commodity prices are expected to persist in the first half of the year.
  5. Lithium prices are volatile, making future projections difficult.

Good To Know

  1. The company transformed to a 'One-Exide' operating model in FY25.
  2. Total equity investment in Exide Energy for lithium-ion stands at Rs. 4802 crores.
  3. Rs. 1400 crore investment is planned for FY27 for lithium-ion business.
  4. The 6 gigawatts lithium-ion capacity is split into 3 GW cylindrical and 3 GW prismatic.
  5. A separate contract with Hyundai involves co-investment and incremental capacity beyond 6 GW.

Key Drivers

  1. Lithium-ion cell manufacturing ramp-up.
  2. Strong domestic demand across segments.
  3. Improved cost control and operational efficiency.
  4. Potential recovery in export markets.

Key Analyst Discussions

Competitive Environment

  1. Government support is crucial for developing a local 'Make in India' cell industry.
  2. OEMs are seeking local supply chain development to reduce reliance on imported batteries.
  3. Imports of batteries are becoming more expensive due to rupee depreciation.
  4. The company aims for 85% plant utilization and 90% yield for lithium-ion manufacturing.
  5. A minimum of 20-25 gigawatts capacity in India is needed for substantial government support.

Market Trends & Consumer Behavior

  1. Indian demand remained favorable due to low inflation, low interest rates, and GST 2.0 reforms.
  2. Rural India experienced strong broad-based revival with rising income and infrastructure development.
  3. GST 2.0-led demand surge continued in Q4, with auto OEM growing over 25% YoY.
  4. Home UPS business recorded highest-ever Q4 sales due to early summer onset.
  5. Telecom and E-Rickshaw segments are shifting towards lithium-ion technology.

Financial Highlights

  1. Q4 material cost impact was roughly Rs. 150 crores negative, reducing gross margin by 90 basis points.
  2. Price hikes of 5-6% were taken in tranches from January to April, with 3% on April 1st.
  3. Sulfur prices increased from Rs. 15/kg to Rs. 75/kg over the last year, with a 40% sequential jump in Q4.
  4. Lead, acid, and plastics constitute 95-96% of the bill of material.
  5. Rupee depreciation offset lead price reduction, impacting net benefit.

Product Composition

  1. 92% of the business, excluding Telecom and E-Rickshaw, grew double-digits.
  2. Telecom and E-Rickshaw segments are declining due to the shift to lithium-ion technology.
  3. Home UPS revenue is around Rs. 2300 crores.
  4. Auto and non-auto business is roughly 50:50, with auto replacement at 70:30.
  5. Lithium-ion prismatic cells are for 3-wheelers and stationary applications, cylindrical for 2-wheelers.

Strategic Considerations

  1. Rs. 1400 crore investment is planned for FY27 for lithium-ion CAPEX and OPEX.
  2. Cylindrical cell customer validation is expected in 2-3 months, prismatic in 3 months.
  3. Yield improvement is critical for cost of cell manufacturing, targeting 90% yield.
  4. The company is the first in India to manufacture cells at this scale.
  5. Management is engaging with OEMs to build offtake across key end-consumer markets.
Exide Industries Ltd (EXIDEIND) Concall Report Analysis & Insights | Dhanarthi