EXIDEIND - Exide Industries Ltd. Share Price

Management Outlook and Key Highlights:

Outlook:

• Lead-Acid Business: Positive near-to-medium term outlook, driven by diversified sectors (automotive aftermarket, industrial infrastructure, exports). Resilience comes from balanced exposure across automotive OEMs, replacement markets, industrial UPS, solar, and railways. Anticipate rebound in automotive OEM demand (post-inventory correction) and telecom stabilization post-5G rollout.
• Lithium-Ion Business: On track for mid-2025 commissioning (Phase 1: 6 GWh). Focus on stabilizing production, homologation, and customer approvals. Targeting mobility (EVs) and energy storage (BESS) segments.

Major Points:

1. Segment Performance (Q2/H1 FY25):

   • Growth Drivers (2/3 of business): Automotive replacement (double-digit growth), industrial UPS (15%), solar (25-30%), exports.
   • Declines (1/3 of business): Auto OEMs (production cuts due to high inventory), Home UPS (monsoon impact), and Telecom (5G rollout completion, shift to lithium-ion).

2. Margins & Costs:

   • Gross margin improved YoY/QoQ due to favorable mix (higher-margin replacement share) and lead price trends.
   • EBITDA margin at 11.3% (Q2) vs. 11.8% YoY (lower fixed-cost absorption). Target: ~13% near-term, 14% long-term via cost efficiency, premium exports, and mix optimization.

3. Strategic Initiatives:

   • Organizational Restructuring: Strengthened B2C/B2B leadership to enhance go-to-market strategies.
   • Lithium-Ion Progress: INR2,852 crore equity invested (INR550 crore in FY25). Plant construction nearing completion; equipment installation ongoing.

4. Key Growth Levers:

   • Auto OEM Recovery: Expected H2 rebound with inventory normalization (30-35 days) and festive demand.
   • Exports: Double-digit growth via new markets/premium products.
   • Industrial Infrastructure: Double-digit growth sustained despite macroeconomic lag; optimism from improving PMI.

5. Risks & Mitigation:

   • Home UPS/Telecom: New channel strategies (inverter batteries) and lithium-ion adoption (via subsidiary) to offset declines.
   • Lithium Pricing: Volatility managed via focus on production ramp-up, not near-term pricing assumptions.

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Question 1: "First question is on the core business, given that you've seen some moderation in the first half and there are a few segments in muted volumes. How should we think about the second half?...Can we expect to go back to double-digit growth?"
Answer: Two-thirds of Exide's business (automotive aftermarket, solar, industrial UPS, infrastructure) grew 14-15% in H1, while one-third (auto OEM, Telecom, Home UPS) declined. Auto OEM is expected to rebound in H2 due to reduced inventories post-festive sales. Telecom decline will stabilize as 5G rollout completes, and Home UPS demand will recover post-monsoon. Management anticipates improved growth in H2, supported by industrial infrastructure and export strength.

Question 2: "Second question is on the lithium-ion business...How many customers have been onboarded so far?"
Answer: Exide is bound by NDAs but noted significant customer traction, including Hyundai. Focus remains on production timelines (mid-2025 commissioning, SOP in 2025). Capacity evacuation plans are progressing, with leadership relocation to the site underway.

Question 3: "Can you share any order book number for the battery pack business?"
Answer: Exide could not disclose specific figures due to NDAs but highlighted strong utilization and capacity expansion in the lithium-ion battery pack segment, driven by rising demand.

Question 4: "How do you think the pricing [for lithium-ion cells] will be done?"
Answer: Prioritizing production startup and factory utilization over pricing strategies. Pricing will depend on market dynamics, raw material volatility (e.g., lithium), and homologation progress.

Question 5: "Total investment in lithium-ion cell plant for this year and next year?"
Answer: Phase-1 investment is ~INR 5,000 crores, mostly in FY25 with minor spillover to FY26. Equity infusion (INR 2,852 crores to date) and bridge loans will fund this. Phase-2 plans are pending market conditions.

Question 6: "In terms of cell chemistry, how are you planning your mix of LFP, NMC?...Funding for lithium business?"
Answer: Exide's lithium-ion strategy includes LFP and NMC chemistries, supported by technology partners. Funding for Phase-1 is internal (equity/debt); no immediate plans for external investors.

Question 7: "Exports growth drivers?"
Answer: Exports rose due to low automotive base, new premium products, and diversification into developed markets. Industrial exports faced European geopolitical/economic headwinds but expect recovery in 2025.

Question 8: "Other expenses increased significantly"¦any one-offs?"
Answer: Higher expenses stemmed from inflationary pressures and lower fixed-cost absorption due to muted revenue growth in certain segments.

Question 9: "Path to 13-14% lead-acid margins?"
Answer: Margin improvement will come from cost-reduction initiatives, premium product mix, aftermarket/exports growth, and operational efficiency.

Question 10: "Price hikes in Q1/Q2?"
Answer: Aftermarket prices increased 1.5% in Q2. OEM/industrial prices are LME-linked.

Question 11: "Reorganization impact?"
Answer: Leadership hires in B2C/B2B segments aim to streamline go-to-market strategies, with results expected by early FY26.

Question 12: "Lithium-ion BIS approvals/vendor localization?"
Answer: Labs and certifications are progressing alongside factory setup. Vendor approvals for components are ongoing, guided by partner support.

Question 13: "Battery Energy Storage System (BESS) traction?"
Answer: Exide's lithium-ion cells will serve BESS and mobility. Growth depends on policy support for renewables, with Exide targeting cell supply to system integrators.

Question 14: "Auto replacement market growth drivers?"
Answer: Rural demand, unorganized-to-organized shift, and brand strength drove double-digit growth. Expansion into white spaces (e.g., tractors) and network enhancements will sustain momentum.