Exide Industries rallies 7%, inches to record high on improved Q1 earnings

Shares of Exide Industries hit an over four-year high at Rs 266.50, as they rallied 7 per cent on the BSE in Tuesday’s intra-day trade amid heavy volume on improved operational performance in June quarter (Q1FY24). The stock of storage batteries and allied product companies was quoting at its highest level since January 2019. It had hit a record high of Rs 305 on August 24, 2018.

Despite raw material costs remaining firm during the quarter, Exide Industries recorded impressive growth in operating profits. The company’s standalone earnings before interest, taxes, depreciation, and amortization (EBITDA) grew by 11.7 per cent year-on-year (YoY) to Rs 432 crore. EBIDTA margin improved 10.6 per cent in Q1FY24 compared to 9.9 per cent in Q1FY23.

Revenue from operations increased by 4.2 per cent YoY to Rs 4,073 crore from Rs 3,907 crore in a year ago quarter. Profit after tax grew 7 per cent YoY to Rs 242 crore.

Exide Industries said automation and cost optimisation initiatives are bearing fruit, thereby supporting enhanced levels of profitability. In the automotive division, demand is steady in the domestic market. Most industrial sectors (such as IUPS, solar, telecom, traction, railways, etc.) are enjoying strong order flow on account of large investments flowing into these sectors, the company said.

“Steady sales expansion in key verticals along with cost optimisation benefits resulted in healthy EBITDA growth. We expect overall demand scenario to be positive in the near-term and profitability levels to increase, supported by easing of input cost inflation and further realisation of cost efficiency initiatives,” Subir Chakraborty, MD & CEO of Exide Industries said.

Meanwhile, the company in its financial year 202-23 (FY23) annual report said that it anticipates a significant surge in its order book as the company makes headway in expanding its range of products and services. With strategic focus on key sectors such as Industrial UPS (IUPS), traction and solar, the company aims to strengthen its position in these markets, where the company is a leading player.

The IUPS market is expected to grow at an accelerated pace over the next 5-7 years. Technology advancements, increasing demand for power backup solutions, increased factory automation and expansion of IT sector will drive the demand. The Government’s vision of 450GW of renewable energy by 2030 and Ministry of New and Renewable Energy’s (MNRE) target of 40GW of rooftop solar solution by 2026, provides large opportunities for our offering, the company said.

Strong automobile sales augur well for company as higher vehicle sales not only help the OEM business but also expand the aftermarkets in years to come. The demand for lead-acid batteries will remain strong in the foreseeable future for both OEMs and aftermarkets.

In Electric Vehicles (EVs) too, a 12-volt Lead Acid Battery is required to operate lights, audio system, and other equipment, which the company is supplying to EV manufacturers. Therefore, the company does not see any immediate threat to its lead acid battery business.

At 12:27 PM; Exide Industries was quoting 6 per cent higher at Rs 264, as compared to 0.13 per cent decline in the S&P BSE Sensex. The average trading volume at the counter jumped three-fold today. A combined 11.3 million shares had changed hands on the NSE and BSE.