Pros and Cons of Investing in Exide Industries

Pros

#1 Well Established Market Position

Exide Industries is the largest manufacturer of lead-acid storage batteries in India. The company has been around for over 75 years and is a household name.

The company specialises in manufacturing storage batteries and power storage solutions. It has a 50% market share in the domestic battery market. If offers a diversified product portfolio, featuring batteries with capacities ranging from 2.5 ampere-hours (Ah) to 20,200 Ah.

It's also a significant player in packaged power technology offering a broad selection of both traditional flooded and cutting-edge VRLA batteries.

The company has 10 manufacturing facilities across India. It also has production units in Sri Lanka, the UK, and Singapore. It exports to over 60 countries.

#2 Good Business Prospects

The management expects Li-ion battery demand to reach 120 gigawatt-hours (GWh) by 2030. The company is expanding to capitalise on this demand.

The company has announced a Rs 36 bn investment in its Li-ion venture, Exide Energy Solutions. It's in the advanced stages of setting up a 12 GWh greenfield lithium-ion cell manufacturing project. Of this, 6 GWh is expected to be commercialised in the ongoing financial year.

As part of a long-term energy transition strategy, Exide Energy has forged strategic partnership with a leading Indian passenger vehicle manufacturer to jointly develop and supply lithium-ion battery cells.

It has also signed a multi-year collaboration with SVOLT Technology (a leading Li-ion cell manufacturer) for Li-ion cell technology.

The company has introduced an advanced AGM VRLA range for Battery energy storage systems (BESS), complementing its Tubular Gel (T-Gel) solutions to offer flexibility across use cases and budgets. It has also developed a complete solution for BESS, including the container, PCS and BMS.

Cons

Slowdown in Growth Rate

Exide Industries has been debt free for many years and has maintained good growth rates in the past.

But the major concern in the minds of investors is the slowdown in the growth rate over the years.

Exide has a history of delivering 20%+ topline and bottomline growth and was widely regarded as a high-quality growth stock.

However, in recent years, the growth rate has slowed. In FY22, the revenue grew 23.5% YoY. In FY23, the revenue growth was 17.9%. In FY24, it was 11.2%. In FY25, it was just 2.8%.

As sales growth slowed, the profits have stagnated. This is partly explained by the EV transition, rising competition, and other factors.

The company is investing for future growth but the investments have impacted margins. This combined with the revenue slowdown has taken a toll on the return ratios.

The company's return on equity (ROE) has not recovered since the covid year of FY21 when it was 10.1%. Since then it deteriorated to 5.8% in FY25. The return on capital employed too has fallen from 14.1% to 9% in that period.

The management has taken measures to improve the long-term prospects of the business but so far, the efforts have not resulted in an improvement in sales growth.

For more details, you can have a look at the Exide Industries fact sheet and quarterly results.

Investors should evaluate the company's fundamentals, corporate governance, and valuations of the stocks when conducting due diligence before making any investment decision.

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Happy investing.

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