The shares of the leading battery manufacturer gained up to 4 percent after the company’s subsidiary signed a memorandum of understanding to supply battery cells for EVs.
With a market capitalization of Rs 37,451.00 crore, the shares of Exide Industries Ltd were trading at Rs 440.60 per share, increasing around 0.15 per share as compared to the previous closing price of Rs 439.95 apiece.
Reason for Rise:-
According to the company filing, Exide Energy Solutions Limited, a subsidiary of Exide Industries Ltd signed a memorandum of understanding with Hyundai Motor Company and Kia Corporation to supply battery cells for HMJL’s electric vehicles dedicated to the Indian market.
Financial Analysis:-
Looking forward to the company’s financial condition, Exide Industries Ltd’s revenue zoomed by 2 percent from Rs 4,372 crore in Q2FY24 to 4,450 crore in Q2FY25. During the same period, net profits shrunk by 14 percent from Rs 270 crore to Rs 233 crore.
The company’s critical ratios show that the return on equity decreased from 7.39 percent in FY21-22 to 6.80 percent in FY22-23, while the return on capital employed decreased from 10.31 percent to 9.82 percent. The net profit margin (NPM) for fiscal year 22-23 is 5.26 percent.
Initiatives and lithium-ion cell manufacturing project:-
The company has entered the rooftop solar market with its “Exide Sunday Solution” and launched specialized energy storage solutions for data centers. Additionally, it is augmenting manufacturing capacities in key growth areas and implementing digitalization initiatives to streamline operations and enhance overall efficiency.
The lithium-ion cell manufacturing project is progressing well, with ₹1,285 crores invested in FY24 and a total equity investment of ₹2,302 crores in its subsidiary, EESL, by March ’24. The company anticipates margins stabilizing in the mid-teens at full capacity utilization and is in talks with various 2-wheeler manufacturers for cell and pack supplies.
Partnerships and Agreements:
The company has signed a non-binding agreement with Hyundai and Kia for a global platform and is in discussions with multiple OEMs to supply lithium-ion cells for electric vehicles. Additionally, it is collaborating with SVOLT for technology transfer and establishing a supply chain.
Investment plans:-
The company plans to invest ₹5,000 crores in lithium-ion cell manufacturing, with ₹2,000 crores already invested. It is confident in financing the project through internal accruals, while also considering bridge loans to address cash flow requirements during project implementation.
Future outlook:-
The company faces uncertainty regarding Extended Producer Responsibility (EPR) obligations and the quantification of liabilities. It must manage the supply chain for lead-acid batteries amid competition from informal recyclers. The focus remains on meeting future demand in automotive and industrial sectors while navigating evolving market dynamics.
Company profile:-
Exide Industries Limited is an India-based firm that designs, produces, promotes, and sells lead-acid storage batteries. The company’s segments are Storage Batteries & Allied Products and Life Insurance.
Written by:- Abhishek Singh
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