EXIDEIND

Struggles with Lead-Acid Slowdown, Lithium Bet Faces Margin and Scale Risks

is navigating a tough transition as its core lead-acid battery business faces demand headwinds, while its capital-intensive lithium-ion venture is yet to scale meaningfully. A weak Q2FY26, rising competition, and lack of policy support have triggered investor caution and earnings downgrades. Revenue declined 2% YoY to ₹4,178 crore in Q2FY26, impacted by channel destocking post-GST cuts and a prolonged monsoon that dampened home-UPS demand. Operating margin fell 180 bps to 9.4%, pressured by weak volumes, higher input costs, and EPR-related provisions. Achieving the 12–13% margin guidance for H2 now hinges on restocking and Q4 price hikes. Exide’s lithium-ion cell plant with SVOLT (6GWh Phase 1) is nearing trial runs, with production expected by end-FY26. Phase 2 will double capacity to 12GWh. Total capex is pegged at ₹6,500 crore, with ₹3,950 crore already invested. Early wins with Hyundai, Kia, and Atul Auto offer visibility, but utilization is expected at just 25–30% in FY27. The lithium space is crowded with players like Reliance, Ola Electric, Tata Sons, and Chinese imports. Exide lacks PLI scheme support, making cost discipline and execution critical. Analysts warn that the low-margin nature of lithium cells could dilute long-term return ratios. Rival Amara Raja posted 8% YoY revenue growth and sequential margin improvement, aided by easing input costs. Exide’s Q2 softness has led to earnings estimate cuts—Motilal Oswal trimmed FY26/FY27 EPS by 9% and 3%, respectively. The stock is down 9% in CY25 and trades at ~19x FY27 P/E. While lithium offers a long-term growth lever, near-term execution, margin pressure, and competitive intensity weigh on investor sentiment.