Exide Industries Q1 FY27 earnings call

Exide Industries reported a strong Q1 FY27, with standalone revenue growing 17.6% year-on-year. This performance was driven by double-digit growth across key business segments including 2-wheeler and 4-wheeler OEM, home UPS, solar, and replacement businesses. EBITDA for the quarter stood at INR 655 crores, marking a 19.5% increase year-on-year, and the EBITDA margin expanded by 20 basis points YoY to 12.4%. Despite these gains, the company faced challenges from elevated input costs and adverse currency movements, which were partially offset by calibrated price adjustments.

The core lead-acid business demonstrated robust growth, with automotive OEM experiencing its third consecutive quarter of 25% growth year-on-year. Home inverters and solar segments also saw over 20% growth, with solar achieving its highest-ever quarterly revenue exceeding INR 400 crores. The replacement market demand remained strong in both rural and urban areas. The company continues to invest approximately INR 500 crores annually in its core lead-acid business for manufacturing technology, automation, and capacity expansion, ensuring sufficient headroom for growth.

Significant milestones were achieved at the Bangalore lithium-ion giga factory. All equipment across the four production lines has been delivered and installed, with utilities fully operational. The first NCM cylindrical line has commenced customer sample deliveries, marking the first locally manufactured cells from the facility. Additionally, the LFP prismatic line has started sample supplies for 3-wheeler and telecom applications. The company expects revenue contribution from the Bangalore plant to begin shortly during FY27, with a target of 25-30% utilization in the first year of operations.

Exide is actively engaging with major 2-wheeler and 4-wheeler OEMs for lithium-ion battery supplies. For 2-wheelers, the company is in the homologation process with three OEMs that collectively represent 80-85% of the Indian EV market. For 4-wheelers, discussions are ongoing with 1-2 major OEMs, and the fourth production line, dedicated to 4-wheeler OEM products, is expected to be commissioned by the end of the fiscal year. The company sees strong existing demand for EV batteries, particularly in the 2-wheeler and 3-wheeler segments, where imported cells will be replaced by local production.

The Board has approved an investment of INR 1,400 crores for FY27, with INR 100 crores already invested in July. The cumulative equity investment in Exide Energy Solutions Limited stands at INR 4,902 crores as of July 31st. While the initial plan for the 12 GWh lithium-ion plant was INR 7,000 crores, this figure may adjust due to currency fluctuations. The company plans to fund these investments through operational cash flows and aims for 50-60% localization of bill of materials for lithium-ion cells within the next 2-3 years.

Currently, raw materials for lithium-ion cells are sourced from China. However, Exide is actively working with interested Indian companies for future domestic raw material sourcing, though this is expected to take 3-5 years to develop a full ecosystem. The company is also monitoring the impact of China's export VAT reduction removal, effective January 1, 2027, on the landed cost of imported cells. Management emphasized that their technology tie-ups and factory setup were completed before recent embargoes, securing their current licensed products.