Why Exide Industries Share Price is Falling

Exide Industries, a veteran in the Indian battery market, has witnessed a sharp reversal in its stock price trajectory.

The company, known for its range of automotive and industrial batteries, has been a familiar name in the industry for decades.

In 2024, the company enjoyed a stellar run, with its share price surging by a substantial 51%.

This upward momentum was fuelled by optimism surrounding the company's foray into the burgeoning electric vehicle (EV) market.

As a key component in electric vehicles, batteries are essential, and the company's position in the industry positioned it as a potential beneficiary of the EV revolution.

However, the recent downturn has been a stark contrast to the previous bullish sentiment.

The stock has experienced a sharp correction, losing 14.4% in the past month and an additional 10.3% in the last five days.

Let's find out the reason for the abrupt decline.

Lower Than Expected Quarterly Results

Battery maker Exide Industries announced a 16% rise in profit after tax, reaching Rs 2.8 billion (bn) bn for Q1 FY25.

The company had reported a profit after tax of Rs 2.4 bn in corresponding period of last year.

Revenue from operations increased to Rs 43.1 bn for the June quarter, compared to Rs 40.7 bn in the same period last year.

The results were lower than market expectations. Rising raw material prices affected the company's performance.

Despite rising raw material prices the overall production costs were lower due to cost optimisation initiatives undertaken by the management.

Earnings before interest, taxes, depreciation, and amortisation (EBITDA) rose by 13.1% to Rs 4.4 bn, up from Rs 3.9 bn in the year-ago quarter. The EBITDA margin expanded by 0.7% points to 10.3% from 9.6% year-over-year.

During the April-June period, Exide Industries also invested another Rs 2 bn as equity in its wholly-owned subsidiary Exide Energy Solutions, with another Rs 0.8 bn invested in the month of July. With this, the total equity investment made by Exide in its EV subsidiary is now at Rs 25.8 bn.

Investors were disappointed by the earnings not meeting predictions, leading to a decline in the stock.

What Next?

Exide Industries has set its sights on several growth strategies. It aims to expand both its automobile and industrial verticals, which showed growth during the recent quarter.

Near-term drivers look promising for these segments, indicating potential for continued growth.

The company is making significant progress on its Lithium-ion project. Onsite construction and installation of production line equipment are currently underway.

This project is a crucial part of the company's strategy to enhance its capabilities in the growing Lithium-ion battery market. By investing in this technology, it aims to meet the increasing demand for advanced energy storage solutions.

Exide Industries also anticipates a significant rise in demand for energy and energy solutions from multiple sectors. This includes automotive, industrial, and renewable energy markets.

The rising demand aligns with the company's growth plans and strategic focus on energy solutions. By positioning itself to meet this demand, the company aims to strengthen its market presence and drive revenue growth.

The recent financial results, although lower than market expectations, provide a solid foundation for future investments and expansion.

How Exide Industries Share Price has Performed Recently

In the past five days, Exide Industries share price tumbled 10.4%. In the past month its share price is down 14.5%.

In 2024, so far its share price is up 50.9% and it has surged 54.8% in the last year.

The stock touched its 52-week high of Rs 620 on 25 June 2024 and a 52-week low of Rs 241.6 on 26 October 2023.

About Exide Industries

Exide Industries is an India-based storage battery company. The company's segments include storage batteries and allied products.

The company is engaged in manufacturing storage batteries for the automotive, industrial, and submarine sectors.

With over 75 years of experience, the company leads the battery market in India. It caters to all top original equipment manufacturers (OEM), including Tata Motors, Maruti, and Bajaj.

Apart from a strong domestic presence, it has an international presence in the USA, Canada, and Gulf Corporation Council (GCC) countries.

For more details, see the Exide Industries company fact sheet and quarterly results.

For a sector overview, read our auto ancillaries sector report.

You can also compare Exide with its peers:

Exide Industries vs Amara Raja Batteries

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