Stock in Action – Exide Industries 07 October 2024

Highlights

1. Exide Industries's share price has gained over 50% year to date in 2024 making it one of the standout performers in the battery manufacturing sector.

2. Exide Industries' financial performance has shown growth over the past year.

3. Exide Industries's quarterly earnings report highlighted a continuous decline in net profit in the last 3 quarters.

4. Exide Industries's stock analyst forecasts positive trends for the future.

5. Exide Industries's share price increased from ₹450 to ₹515 between September - October.

6. Exide Industries stock has outperformed the market delivering over 90% returns in the last year.

7. Exide Industries is currently trading at ₹485 showing a 3.82% decrease as of 12:15 pm on NSE.

8. Exide Industries is losing momentum today following the broader market trend. Nifty is currently trading below ₹25k.

9. Exide Industries mainly manufactures storage batteries and related products in India.

10. As per the June quarter filings the company has a 45.99% promoter holding, 17.87% DII holding and 13.74% foreign institutional investor (FII) holding.

Why is Exide Industries Share falling?

Exide Industries reported a 16% increase in profit after tax for Q1 FY25 reaching ₹2.8 billion up from ₹2.4 billion in the same quarter last year. The company’s revenue from operations also grew hitting ₹43.1 billion for the June quarter compared to ₹40.7 billion a year ago.

Despite this growth, the results fell short of market expectations mainly due to rising raw material costs which affected performance. However, the company managed to reduce overall production costs through cost optimization initiatives.

Earnings before interest, taxes, depreciation, and amortization (EBITDA) rose 13.1% to ₹4.4 billion up from ₹3.9 billion in the corresponding period last year. This led to a slight improvement in EBITDA margin which increased by 0.7 percentage points reaching 10.3% compared to 9.6% last year.

During the April-June quarter, Exide Industries invested an additional ₹2 billion as equity in its wholly-owned subsidiary, Exide Energy Solutions with a further ₹0.8 billion invested in July. This brings the total equity investment in its EV subsidiary to ₹25.8 billion. Despite the growth in profits investors were disappointed by the earnings missing market predictions, leading to a decline in Exide’s stock.

What Next?

Exide Industries is gearing up for significant growth with plans to expand both its automotive and industrial divisions which have shown promising performance in the last quarter. The outlook for these segments appears positive suggesting continued growth potential.

A key focus for the company is its Lithium-ion battery project, where construction and equipment installation are actively progressing. This initiative is central to Exide's strategy to tap into the rapidly growing Lithium-ion battery market addressing the rising demand for advanced energy storage solutions.

Exide also expects a surge in energy demand across various sectors including automotive, industrial and renewable energy. The company is strategically positioning itself to capitalize on this aiming to strengthen its market position and drive revenue growth.

While recent financial results fell short of expectations they provide a solid foundation for future investments and expansion efforts.

About Exide Industries

Exide Industries an Indian company with over 75 years of experience is a market leader in the storage battery industry. It manufactures batteries for various sectors including automotive, industrial and even submarines.

The company supplies batteries to top vehicle manufacturers like Tata Motors, Maruti and Bajaj, solidifying its position as a trusted supplier in India. Alongside its strong domestic presence, Exide Industries also has a global reach, operating in countries like the USA, Canada and across Gulf Cooperation Council (GCC) region.

Conclusion

Exide Industries has excelled in the battery manufacturing sector with a share price increase of over 50% year to date and more than 90% returns in the last year. Despite a 16% profit increase in Q1 FY25, its quarterly results fell short of market expectations due to rising raw material costs leading to a decline in share prices. However, Exide is strategically positioned for growth, focusing on its automotive and industrial divisions alongside a significant investment in its Lithium ion battery project. These initiatives suggest a strong foundation for future expansion, making Exide a stock to watch for potential recovery.