EXIDEIND - Exide Industries Ltd. Share Price

In the earnings call for Q3 FY 2025-26, Exide Industries provided optimistic forward-looking statements, highlighting various growth opportunities. Management noted that nearly 92% of the business saw a 12% increase in top-line growth, driven by strong performance in Auto OEM and Auto Aftermarket, both achieving record revenues.

Despite some challenges, including a notable decline in the telecom and export sectors, overall revenue grew by approximately 5% year-on-year, with domestic growth excluding telecom at 10%. The auto OEM segment alone saw a remarkable growth of 25% year-on-year. The robust growth momentum is expected to continue into Q4, supported by increased automotive demand and recovering sectors like home inverters and solar.

Management details key metrics: the gross margin improved by 175 basis points sequentially, maintaining an EBITDA margin at 11.7%. The adjusted pretax profit increased by 12.8%, excluding one-time impacts. For the lithium-ion manufacturing project, an investment of INR 320 crores was made in Q3, with a total equity investment reaching INR 4,252 crores, as product validation from the cylindrical cell line is underway.

The outlook for the lead acid business remains positive due to an expected increase in automotive OEM demand and power backup solutions, alongside the launch of new product lines, including AGM batteries for premium vehicles and the PowerBox range of inverter batteries. Management anticipates high single-digit to early double-digit growth for the core business next year, highlighting a strategic focus on integrating cost-saving initiatives and maximising production efficiencies.

1. Siddhartha's Question: "Can you provide a breakup of revenue coming from telecom, solar, and exports, and when can we expect growth in these segments?"

   Avik Roy's Answer: "Telecom and exports contribute about 7% to 8% of our turnover, with telecom declining due to a shift to lithium-ion. Exports are now 5% to 6%, impacted by geopolitical tensions. Our industrial business grew 13% in Q3, with solar recovering to 12% growth year-to-date. We believe this weakness has bottomed out and expect growth as tariff barriers ease."

2. Siddhartha's Follow-up: "What is the current contribution from solar, and how much cost from commodity increases remains unpassed?"

   Avik Roy's Answer: "Solar currently accounts for 4% to 5% of our total revenue. Despite commodity cost pressures, we absorbed increases this quarter to benefit customers from GST reductions. We expect to continue passing on costs gradually, with a 100 to 150 basis points improvement in margins next year."

3. Vinay Singh's Question: "What percentage of revenue is generated from industrial segments like railways, and do we face risk from industries shifting to lithium?"

   Avik Roy's Answer: "The industrial sector constitutes about 30% of our revenue. Railways have increased spending due to policy changes on battery replacements, and we offer lead-acid solutions while developing lithium for future needs. We're well-positioned for mixed demand in data centers, balancing lead and lithium usage."

4. Vinay Singh's Follow-up: "What is our current data center revenue and timeline for lithium dispatches?"

   Avik Roy's Answer: "Data center revenues are approximately INR 75 to 100 crores per quarter. For lithium deliveries, we expect samples to go to customers shortly, with potential commercial dispatches by the end of this financial year, aligning with customer testing cycles."

5. Vibhav's Question: "Can we discuss the stability of the telecom business and the outlook for replacement demand?"

   Avik Roy's Answer: "Telecom now contributes just 1% of our revenue, and while it's stabilizing, we anticipate further shifts to lithium. Regarding replacement demand, the automotive sector has recovered strongly, and we've seen consistent growth leading us to remain optimistic about future aftermarket performance."

6. Pramod Amthe's Question: "What's the timeline for utilizing the INR 1400 crores approved for lithium?"

   Avik Roy's Answer: "We've approved INR 1400 crores for the fiscal year, with timing based on capital needs for commissioning and managing working capital effectively."