Whalesbook
📉 The Financial Deep Dive
The Numbers:
Exide Industries announced a top-line revenue of INR4,000+ crores for Q3 FY2025-26, marking a 5% year-on-year (YoY) increase. While specific Profit After Tax (PAT) or Earnings Per Share (EPS) figures were not detailed, the company showcased remarkable resilience in profitability.
The Quality:
Despite significant cost pressures from key raw materials including metals (silver, tin, copper), and sulfur, compounded by a weakening rupee, Exide Industries managed to maintain its EBITDA margin at 11.7% YoY. This stability was a result of targeted cost excellence projects, a favourable shift in product mix, improved realisations, and robust volume growth. Notably, the company achieved a sequential EBITDA margin expansion of 220 basis points (bps) and a gross margin expansion of 175 bps compared to the previous quarter.
The Grill:
Management commentary highlighted the strong performance in the Auto OEM segment (+25% YoY) and sustained double-digit growth in the automotive aftermarket. The Industrial Infra segment also contributed positively with double-digit growth. However, headwinds from the telecom and export businesses, which collectively represent about 8% of total revenue, muted the overall headline growth. Domestic growth, excluding telecom, stood at a healthier 10%. Management expressed optimism for the lead-acid business outlook, anticipating continued momentum from automotive demand, solar energy initiatives, and power backup requirements. They indicated that the telecom business, now a minimal 1% of revenue, has likely bottomed out, with a strategic pivot towards lithium-ion packs. Efforts are underway to address export challenges stemming from tariffs.
🚩 Risks & Outlook
Specific Risks:
The primary risk remains the volatility in commodity prices, which could continue to impact margins. However, the company's B2B focus and material indexing in the lithium-ion business are expected to offer more stable margins in the future compared to its traditional lead-acid business. Tariffs continue to pose a challenge for export markets. The performance of presently declining segments like telecom and exports is crucial for achieving overall growth targets.
The Forward View:
For the upcoming fiscal year (FY27), Exide Industries anticipates high single-digit to early double-digit growth for its core business. Strategic capital allocation is directed towards enhancing manufacturing technology, automation, and bolstering its future-ready lithium-ion business. The company sees significant opportunities in the data center segment, with current quarterly revenues ranging between INR75-100 crores and a strong pipeline indicating potential for substantial growth. Product validation for the cylindrical cell line in its lithium-ion project is ongoing, with other manufacturing lines nearing completion, marking critical progress in its diversification strategy.