Essentially, the Nifty 50 has been flat since that time, nearly a year and a half ago, but the stock has been in a downtrend.
After a stellar run-up in the 2022-2024 period, the stock peaked—even before the Nifty—back in July 2024 at around ₹580. Since then, it has been a significant underperformer.
A long-term chart of the stock price makes that clear.
But what does the future hold for the stock?
In this editorial, we will discuss the pros and cons of Exide Industries.
Pros
- 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 specializes 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 capitalize on this demand.
The company has announced a ₹3,600 crore 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 commercialized in the ongoing fiscal year.
As part of a long-term energy transition strategy, Exide Energy has forged a 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% year-on-year. 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 in 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.
Investors should evaluate the company’s fundamentals, corporate governance, and valuations of the stocks when conducting due diligence before making any investment decision.
Happy investing.
Disclaimer: This article is for information purposes only. It is not a stock recommendation and should not be treated as such.
This article is syndicated from Equitymaster.com
