EXIDEIND - Exide Industries Ltd. Share Price

During the Q4 FY26 earnings call, management provided an optimistic outlook for Exide Industries. They reported a 9.4% year-on-year revenue growth for the quarter, with domestic business sales increasing by 12.5%, achieving its highest-ever quarterly revenue. For the full year FY26, the company achieved a 4.1% growth, driven by nearly 92% of its business growing at double digits, particularly within automotive OEM and home UPS segments. The EBITDA margin for Q4 was sustained at 11.7%, reflecting the company's ability to control costs amidst rising commodity prices.

Looking ahead, management remains cautiously optimistic about the lead-acid business, anticipating mid to high single-digit growth in FY27. They believe that improved economic conditions and consumer affordability will continue to drive demand, despite geopolitical headwinds affecting exports and telecom segments. Exports currently comprise about 5% of revenue, with expectations for recovery as geopolitical tensions ease.

Key strategic initiatives were highlighted, including an investment of Rs. 600 crores in Q4 and Rs. 1,500 crores in FY26 for lithium-ion cell manufacturing, with anticipated sample deliveries starting this month. Management projected long-term profitability from this segment, expecting improved local supply chains.

Forward-looking comments included a projected investment of Rs. 1,400 crores in FY27. The company expressed confidence that its advanced product portfolio, extensive distribution network, and strong brand recall will drive future growth. Management emphasized they would closely monitor domestic and global economic conditions, especially inflation, to navigate challenges effectively.

1. Question: In the opening remark, we talked about 8% of the business declining, which is Telecom and Exports. Fair to say that Exports will be around 5% of the top line and Telecom around 3%. Will that be the breakup?

Answer: Yes, Vinay, you are right in the ballpark. The Telecom segment would also include a bit of E-Rickshaw business, contributing to the 3% figure.

2. Question: When you look at next year on this core business, Exports will have volatility for the first half but will recover. So, then we should be actually quite set for a much better top line growth than this year, next year, right?

Answer: I believe the baseline is low for these businesses after the decline. If geopolitical tensions ease, I see a good chance to increase our share of Exports, driving incremental revenue and improving overall top line growth for the next fiscal year.

3. Question: On the new energy business, could you clarify the status of cylindrical and prismatic lines, and when should we anticipate revenue generation from them?

Answer: The prismatic line is scheduled for this year and should generate revenue sooner due to less validation required compared to cylindrical, which will begin trials first. We expect prismatic revenue to start earlier in the year.

4. Question: What was the net impact on material costs for Quarter 4 and what price hikes have you taken?

Answer: The net impact was roughly Rs. 150 crores, leading to a gross margin decrease of about 90 basis points. We took incremental price hikes of about 5-6% across various businesses starting January, with further adjustments leading into April.

5. Question: Can you elaborate on the lithium-ion business, including future investment plans and expected returns?

Answer: We have a Board-approved investment of Rs. 1,400 crores for FY27. While we're ramping up production, commodity prices and demand volatility make precise return projections difficult at this stage, but we anticipate stronger metrics as we stabilize operations.

6. Question: What is your outlook on the core lead-acid battery business growth in FY27 and the medium-term CAGR?

Answer: The core business should see mid-to-high single-digit growth to early double-digit growth in FY27. Given past performance, I believe the medium-term CAGR may remain close to the historic average of around 11%.

7. Question: Given the current situation, do you anticipate any further price hikes due to commodity inflation?

Answer: Yes, due to persistent inflation in key materials like steel and sulfur, we are prepared to take further price hikes. Current and future prices have prompted us to pass on these increased costs to maintain our margins effectively.

8. Question: What's the customer validation process timeline for prismatic and cylindrical cells?

Answer: For prismatic cells, customer validation will likely take 2-3 months, while cylindrical cells may take a similar period as it depends on client needs and their validation processes.