Exide Industries lead-acid resilience supports lithium-ion plant commercialisation outlook

Investment View

In its August 4, 2026 company update, ICICI Securities retained its BUY rating on Exide Industries with a target price of Rs 520, compared with the current market price of Rs 445. The recommendation is supported by resilient demand in Exide’s core lead-acid battery franchise and the approaching commercialisation of its lithium-ion cell manufacturing capacity.

ICICI Securities views Exide as part of the duopolistic organised Indian lead-acid battery market, with an approximately even sales mix between automotive and industrial applications. Exide also has lithium-ion assembly operations through Nexcharge, with 1.5 GWh of capacity, and a 12 GWh lithium-ion cell manufacturing venture through Exide Energy Solutions.

Q1 FY27 Financial Performance

Standalone Q1 FY27 operating income rose 17.6 per cent year on year and 16.6 per cent quarter on quarter to Rs 5,305 crore. EBITDA increased 19.5 per cent year on year to Rs 655 crore, while EBITDA margin improved by 19 basis points year on year to 12.4 per cent and by 70 basis points sequentially. Reported PAT grew 27.1 per cent year on year and 30.3 per cent quarter on quarter to Rs 407.3 crore.

ICICI Securities characterised the quarter as healthy, with margin performance at 12.4 per cent.

Lead-Acid Business Outlook

The broker’s central positive view is that Exide’s lead-acid business is steadier than market perception. The company benefits from a dominant OEM position and a high-margin aftermarket business, with double-digit growth across more than 90 per cent of operations. These operations include automotive OEM, replacement, solar, home UPS, railways, industrial UPS and motive-power applications.

ICICI Securities believes the legacy business can deliver high single-digit to low double-digit growth even before lithium-ion makes a meaningful contribution. Healthy automotive production, replacement demand and pricing power are expected to support margins despite commodity pressures. Elevated OEM sales could also create a multi-year replacement cycle, while ongoing debottlenecking should keep capacity adequate.

Demand Trends and Management Commentary

Management said the demand environment remained supportive after GST rationalisation, with healthy rural and urban automotive and consumer demand. Key operating observations included:

• Automotive OEM recorded its third consecutive quarter of more than 20 per cent year-on-year growth, albeit on a low base.
• Solar revenue reached an all-time quarterly high of about Rs 400 crore.
• Industrial infrastructure excluding telecom grew at a double-digit pace.
• Exports returned to growth of more than 20 per cent.
• Exide implemented price increases of about 4 to 6 per cent across categories during Q1 FY27 to mitigate commodity inflation and rupee depreciation.

Management expects government infrastructure tenders, which were soft, to recover in H2 FY27.

Lithium-Ion Commercialisation

Lithium-ion commercialisation is the principal longer-term optionality for Exide. All four Bengaluru Gigafactory production lines have been installed and utilities have been commissioned. Exide has supplied customer samples from its NMC cylindrical line and LFP prismatic line for three-wheelers and telecom applications.

Management expects commercial revenue during FY27 after customer approvals and has retained its FY27 utilisation guidance of 25 to 30 per cent. LFP may ramp faster because approvals for telecom, stationary storage and three-wheeler applications are shorter.

Exide has approved Rs 1,400 crore of lithium-related investment for FY27. It continues to invest around Rs 500 crore annually in lead-acid debottlenecking, automation and brownfield expansion. Management aims to localise 50 to 60 per cent of the lithium-ion bill of materials over two to three years.

Valuation

ICICI Securities values Exide at a sum-of-the-parts target price of Rs 520. The broker continues to value the lithium business on a capital-work-in-progress basis because its commercialisation timing and margin profile remain uncertain.

Key Risks

• Delays in commissioning and ramp-up of the lithium-ion plant.
• Lower-than-expected operating leverage in the lead-acid business.