Exide powers up with Li-ion batteries despite weak revenue outlook

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Exide Industries Ltd aims to capitalize on these opportunities by venturing into lithium-ion cell manufacturing. Investors have given a thumbs up. Exide’s shares have risen by nearly 52% so far in 2023, versus the 9.5% gain in the Nifty 50 index.

Sentiment for the stock has also been supported by the steady outlook for the company’s core business—lead acid batteries. But given that Exide’s lithium-ion cell plant is in focus now, meaningful progress here is crucial. Last week, Exide invested ₹100 crore in the equity share capital of its wholly owned subsidiary—Exide Energy Solutions Ltd—through a rights issue.

It is under this subsidiary that Exide is setting up a plant to manufacture lithium-ion cells. The plant is yet to start operations and once it scales up it would add to Exide’s earnings. According to the company’s FY23 annual report, the proposed investment for the lithium-ion manufacturing facility is ₹6,000 crore.

“Lithium-ion cell plant should be ready by FY25-end and may have single digit margin initially, and reach mid-teens in medium term in line with global peers at higher capacity utilization," said a report by Prabhudas Lilladher dated 7 September. Having said that, the path ahead is not without bumps. “The transition from lead acid business to lithium-ion does not offer good revenue visibility in the near term as Exide is yet to acquire anchor customers for its plant.