Exide Industries, a leading manufacturer of automotive and industrial lead-acid batteries in India, has announced its financial results for the second quarter of the fiscal year 2024. The company reported a near 14% decline in its consolidated net profit, while revenues showed a modest increase. The results reflect a challenging operating environment, marked by rising input costs and market pressures.
For the quarter ended September 30, 2023, Exide posted a net profit of ₹161.9 crore, a decrease of 13.8% compared to ₹187.5 crore in the same period last year. Despite the dip in profitability, the company’s revenues showed a marginal growth, reaching ₹3,642 crore, up 3.1% from ₹3,537 crore in Q2 FY23.
Exide’s earnings were affected by a combination of higher raw material costs and subdued demand in certain sectors, particularly in the automotive segment, which has been facing cyclical headwinds. The increase in commodity prices, especially lead, a key raw material in battery manufacturing, put significant pressure on the company’s margins. While Exide has made strides in mitigating these challenges through strategic price hikes and cost control measures, the impact on profitability was visible in the quarterly results.
The company’s operating performance was also constrained by an uptick in lead prices, which increased substantially during the quarter. Lead, which accounts for nearly 70% of the raw material cost in battery production, has seen a volatile pricing trend, affecting the margins of battery manufacturers like Exide. While the company has been proactive in adjusting product prices to counterbalance the rising costs, the lag between cost inflation and price adjustments contributed to the overall decline in profit.
Exide’s EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization) for the quarter stood at ₹421 crore, a slight decrease from ₹438 crore in Q2 of FY23. The company’s EBITDA margin came in at 11.5%, lower than the 12.4% recorded in the same period last year, reflecting the pressure from rising costs.
On a positive note, Exide saw growth in its non-automotive segments, including industrial and institutional batteries, as demand for energy storage solutions remained steady. The company’s focus on diversifying its product portfolio beyond automotive batteries has helped reduce its reliance on the cyclical automotive market. The demand for industrial batteries, especially in the renewable energy, telecom, and infrastructure sectors, showed resilience despite broader economic challenges.
Exide’s management remains optimistic about the long-term growth prospects of the non-automotive business, including its traction in sectors such as electric vehicles (EVs) and renewable energy storage solutions. The company has been ramping up its focus on providing advanced storage solutions for EVs and solar energy applications, positioning itself as a key player in India’s rapidly evolving green energy landscape.
Looking ahead, Exide is optimistic about improving its margins and profitability as input cost pressures ease in the coming quarters. The company’s focus on improving operational efficiencies, expanding its presence in non-automotive sectors, and strengthening its market position in the EV space is expected to drive sustainable growth.
Exide’s stock has seen mixed reactions from analysts, with some expressing concerns about the short-term impact of input cost inflation, while others remain optimistic about the company’s ability to adapt and expand in the green energy and EV segments. As Exide continues to adapt to changing market conditions, the company remains committed to driving innovation and growth in India’s battery industry.
