During the concall following the release of its Q4 FY25 results, Exide Industries’ management states that the company’s EBITDA margins experienced a marginal impact due to elevated raw material prices, particularly antimony. Despite this headwind, the company achieved a 4% quarter-on-quarter growth in EBITDA. For the full fiscal year 2024-25, while overall sales saw a slight increase, Exide maintained double-digit growth in the auto replacement, industrial UPS, and solar verticals. However, the auto OEM and industrial sectors faced lower demand. The company’s revenue from operations for Q4 FY25 stands at ₹4,159.42 crore, a 4% year-on-year increase. Standalone profit after tax (PAT) for the quarter is ₹254.60 crore, reflecting an 11% decline compared to the previous year. For the entire fiscal year, PAT rose by 3% to ₹1,077 crore. Exide’s board recommends a final dividend of ₹2 per equity share. The company continues to invest in its lithium-ion cell manufacturing subsidiary, Exide Energy Solutions Limited (EESL), with a total investment reaching ₹3,602.23 crore.
Key Insights: The primary focus of the news is the impact of rising raw material costs on Exide Industries’ profitability in the fourth quarter of FY25. While revenue shows a modest year-on-year growth, the increase in input costs, specifically antimony, has put pressure on EBITDA margins. Key events include the announcement of the Q4 and full-year financial results, the management’s explanation during the concall regarding margin pressures, and the recommendation of a final dividend. The potential impact could be a short-term negative sentiment on the stock due to the dip in PAT and margin contraction. However, the strong performance in the replacement market and the ongoing investment in the future-oriented lithium-ion business might provide some counter-balance. The lower demand from auto OEMs indicates a potential lag in the overall automotive sector’s growth affecting Exide’s OEM segment.
Investment Implications: The marginal impact on EBITDA due to raw material prices suggests that investors should monitor commodity price trends, particularly for antimony, as they could continue to affect Exide’s profitability in the near term. The double-digit growth in the replacement market is a positive indicator of a stable revenue stream. The significant investment in EESL highlights Exide’s strategic focus on the electric vehicle (EV) sector, which could be a long-term growth driver. Investors should consider the timeline and potential returns from this investment. The reduced demand from auto OEMs could be a concern, reflecting broader challenges in the automotive industry. However, the growth in industrial UPS and solar verticals provides diversification. Considering the dividend announcement, the stock might appeal to investors seeking regular income. Overall, a cautious approach is advisable, balancing the short-term margin pressures with the long-term growth potential in the EV sector and the stability of the replacement market.
