Domestic Gigafactory And Grid Integration Will Unlock Battery Opportunity

Key Takeaways

• Gigafactory scale, policy support, and manufacturing versatility could enable Exide to far outperform Indian battery market expectations with substantial profit and margin growth.
  
• Organizational renewal and expansion into new channels position Exide for resilient, diversified, and high-margin growth amid accelerating EV, renewable storage, and global battery demand.
  
• Exide risks revenue decline and margin pressure from heavy reliance on legacy chemistries, rising costs, uncertain new investments, environmental liabilities, and inadequate adaptation to industry shifts.

Catalysts

Designs, manufactures, markets, and sells lead acid storage batteries in India and internationally.

• Analyst consensus expects Exide's lithium-ion gigafactory will meaningfully add to future profits; however, the scale, first-mover domestic advantage, and multi-chemistry capability (NMC, LFP, prismatic, cylindrical), coupled with imminent policy tailwinds favoring local cell manufacturing, position Exide to dominate the Indian battery market far beyond current expectations, offering potential for step-change revenue and operating margin expansion as utilization ramps past initial breakeven.
  
• Analysts broadly agree that new leadership and organizational realignment boosts operational efficiency, but the aggressive "white space" expansion-including new e-commerce, consumer durable, and OEM channels in both mobility and stationary segments-can rapidly unlock previously untapped recurring revenue streams, driving higher growth and above-industry-average net margin improvements as the business model becomes more diversified and resilient.
  
• With India and global policymakers mandating rapid grid-scale renewable integration and battery storage (government's 80 GWh incremental demand for solar-linked storage by 2030), Exide is uniquely suited to capture a disproportionate share of this booming segment, which could see high-margin, non-cyclical stationary storage become a core profit pillar, structurally boosting long-term earnings visibility.
  
• Exide's established brand and distribution in the automotive aftermarket are underappreciated levers, especially as vehicle electrification accelerates and vehicle parc expands-this entrenched network will enable Exide to monetize the transition to EVs and hybrids through both lead-acid and lithium products, translating to market share gains, sustained revenue growth, and improved cash flow stability throughout the decade.
  
• The combination of strategic international partnerships, proven execution of technology upgrades (such as full conversion to punched grid and continuous casting), and zero-debt status will allow for rapid capital deployment into future capacity additions and M&A, potentially driving explosive top-line growth and sector-leading return on capital as global battery demand enters an exponential phase.

Exide Industries Future Earnings and Revenue Growth

Assumptions

• This narrative explores a more optimistic perspective on Exide Industries compared to the consensus, based on a Fair Value that aligns with the bullish cohort of analysts.
• The bullish analysts are assuming Exide Industries's revenue will grow by 8.9% annually over the next 3 years.
• The bullish analysts assume that profit margins will increase from 4.6% today to 8.1% in 3 years time.
• The bullish analysts expect earnings to reach ₹18.0 billion (and earnings per share of ₹21.22) by about July 2028, up from ₹8.0 billion today. The analysts are largely in agreement about this estimate.
• In order for the above numbers to justify the price target of the more bullish analyst cohort, the company would need to trade at a PE ratio of 36.1x on those 2028 earnings, down from 41.9x today. This future PE is greater than the current PE for the IN Auto Components industry at 31.8x.
• Analysts expect the number of shares outstanding to remain consistent over the next 3 years.
• To value all of this in today's terms, we will use a discount rate of 13.96%, as per the Simply Wall St company report.

Exide Industries Future Earnings Per Share Growth

Risks

• Exide Industries' continued heavy reliance on traditional lead-acid battery markets exposes it to secular risks from the rapid global shift to advanced lithium-ion and solid-state battery technologies, which could shrink its future revenue base as OEM and industrial customers transition away from legacy chemistries.
  
• Escalating input costs, notably sharp increases in antimony prices and ongoing exposure to lead, combined with limited pricing power due to intensifying competition and slow regulatory response, have recently compressed gross margins and threaten to further reduce net margins if the company cannot consistently pass through costs.
  
• The company faces uncertain returns and prolonged profitability headwinds from its large-scale lithium-ion cell manufacturing investments, given global oversupply, falling cell prices, operational startup inefficiencies, and the need to achieve high utilization rates rapidly to avoid margin dilution at the overall earnings level.
  
• Persistent environmental and regulatory risks related to hazardous materials in legacy operations-such as lead pollution liabilities and hazardous waste management-could trigger unforeseen legal charges or escalating compliance costs, eroding net earnings and weighing on cash flows.
  
• Exide's current strategy does not directly address evolving industry structure, including the adoption of battery-as-a-service models, rapid moves by automotive OEMs towards self-sourced or integrated solutions, and the growing momentum of technologically advanced, globally competitive entrants-all of which threaten to erode Exide's market share, pricing power, and future revenue growth in both automotive and industrial segments.

Valuation

• The assumed bullish price target for Exide Industries is ₹515.35, which represents two standard deviations above the consensus price target of ₹393.18. This valuation is based on what can be assumed as the expectations of Exide Industries's future earnings growth, profit margins and other risk factors from analysts on the bullish end of the spectrum.
• However, there is a degree of disagreement amongst analysts, with the most bullish reporting a price target of ₹534.0, and the most bearish reporting a price target of just ₹290.0.
• In order for you to agree with the bullish analysts, you'd need to believe that by 2028, revenues will be ₹222.9 billion, earnings will come to ₹18.0 billion, and it would be trading on a PE ratio of 36.1x, assuming you use a discount rate of 14.0%.
• Given the current share price of ₹391.85, the bullish analyst price target of ₹515.35 is 24.0% higher.
• We always encourage you to reach your own conclusions though. So sense check these analyst numbers against your own assumptions and expectations based on your understanding of the business and what you believe is probable.