Exide Industries Ltd (NSE: EXIDEIND) Q3 2026 Earnings Call dated Feb. 03, 2026
Corporate Participants:
Avik Roy — MD and Chief Executive Officer
Manoj Kumar Agarwal — Finance and Chief Financial Officer
Pravin Saraf — Executive Director
Analysts:
Aditya Jhawar — Analyst
Siddhartha Bera — Analyst
Vijay Singh — Analyst
Siddharth — Analyst
Binay Singh — Analyst
Vibhav Zutshi — Analyst
Pramod Amthe — Analyst
Raghunandhan — Analyst
Mumuksh Mandlesha — Analyst
Sangeeta Purushottam — Analyst
Preet — Analyst
Sukrit Patel — Analyst
Abhishek Kumar — Analyst
Presentation:
operator
Ladies and gentlemen, you are connected to Exide Industries earnings conference call. Please stay connected. The call will begin shortly. Good day ladies and gentlemen, good day and welcome to Exide Industries Q3FY26 earnings conference call hosted by Investec Capital Services. As a reminder, all participants line will be in listen only mode. And there will be an opportunity for you to to ask question after the presentation concludes. Should you need assistance during this conference call, please signal an operator by pressing Star then zero on your touchstone phone. Please note that this conference is being recorded. I now hand over the conference to Mr. Aditya Jawar from Investech Capital. Thank you. And over to you sir.
Aditya Jhawar — Analyst
Yeah. Thank you. Good afternoon to you all from Excite Industries. We have with US MD and CEO Mr. Avik Royce. Director of Finance and CFO Mr. Manoj Kumar Agarwal. Mr. Praveen Saraf, MD and CEO of Xtaid Energy Solutions. President of Legal and Corporate affairs and company secretary Mr. Cheetinder Kumar. Before we proceed, here is a disclaimer for the call. Few statements by the company’s management in the call may be forward looking in nature. And we request you to refer to the disclaimer in the earnings presentation for details. We will start the call with a brief opening remark from the management followed by Q and A session.
I would now like to invite Mr. Avik Roy for the opening remarks. Thank you. And over to you sir.
Avik Roy — MD and Chief Executive Officer
And the board of excitement. Across multiple segments of the company. Commodity prices hotting up. We decided not to take price correction for the end consumer to benefit. The overall macroeconomic scenario in Q3 was positive. Driven by low inflation rate, low repo rates and all contributing to increased purchasing power of the end customer. Coming to the performance of the company during Q3, nearly 92% of the business has grown by around 12% on the top line within this auto, OEM, auto aftermarket, industrial infra and the inverters continue to contribute to growth. Industrial infra performance improved year on year basis order flow and execution picked up in B2B sectors like railway traction and industrial ups.
For OEMs the headline growth numbers still remain muted because 8% of the remaining businesses had a strong decline. Namely our telecom business as well as the exports business. This led to a total 5% year on year sales growth during the quarter. And this was the first ever Q3 which is supposed to be our smallest quarter. First ever Q3 where we crossed our top line of 4000 crores. Our domestic growth ex telecom is at 10% in Q3 the company ramped up production leading to higher capacity utilization and positive impact on the bottom. Cost pressures continued due to increase in raw material prices, especially the metals we use for our alloys, silver, tin, copper and sulfur for sulfuric acid.
They were at near their all time highs. Weakening of rupee against dollar added further pressure to the input costs. However, all our cost excellence projects helped improve the gross margin by 175 basis points on a sequential quarter basis. Despite this, the company was able to maintain the year on year ebitda margin at 11.7% for Q3, buoyed by strong volume growth, improved product mix, better realization and benefits accruing from the various cost excellence projects. All the above efforts have resulted in expanding the EBITDA margin on a sequential quarter basis by 220 basis points. Our adjusted pre tax profits if I take out the one time impacts of both last year’s quarter three and this year’s quarter three is at plus 12.8%.
This momentum is Looking at the January numbers, this momentum is expected to spill over into Q4 as well. Home inverters and solar verticals returned to growth trajectory after the extended monsoon and the GST led slowdown in Q2. Industrial infra continued to deliver double digit growth on a year on year basis. Tariff uncertainties and geopolitical tensions continue to impact the exports business and it’s still a work in progress. We expect the situation to continue in similar trend in Q4 and given the announcements which we heard last night, it only gives us more hope that those markets where we were struggling due to tariff barriers will open up as we enter the last quarter of FY26.
The outlook for the lead acid business remains positive across most business verticals due to uptake in automotive OEM demand, growing aftermarket demand drive for solar energy and rising power backup demand from customers this quarter we have already Some of you may have noticed this quarter we have just launched AGM batteries for premium passenger vehicles. We’ll soon be announcing launch of our Ultra and Powerbox range of inverter batteries catering to premium and economy segments as well as well as solar grid tie inverters. In addition, we have also supported Tata Sierra Petrol model and the new domestic Kia Seltos model as 100% supplier to these two SKUs of our customers.
I’m told both these SKUs both these models are doing very well in the market. I believe that Exide with its advanced product portfolio, Pan India distribution network and strong brand recall will continue to benefit from growth opportunities. Moving on to the lithium ion cell manufacturing project. We have invested about 320 crore in Q3 and further 50 crore in January. With this, the total equity investment made in Exide Energy till date stands at 4252 crore. Product validation from the cylindrical cell line is ongoing which is meant for two wheelers while installation and commissioning is nearing completion in the other lines.
Meanwhile, the company continues to engage with various OEMs for two wheeler, three wheeler and four wheeler and stationary energy providers across key end markets. With this I close my opening remarks. I’ll be happy to take your questions now. Thank you.
Questions and Answers:
operator
Thank you very much. We will now begin the question and answer session. Anyone who wishes to ask a question may press Star and one on their touchstone telephone. If you wish to remove yourself from the question queue, you may press STAR and two participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. The first question is from the line of Siddharth from Nomura. Please go ahead.
Siddharth
Yeah, thanks for the opportunity sir. First question is on the industrial side of the business. If you can sort of give some more breakup about what percentage of our total revenues will be coming from telecom, solar and also on the export side given that some of these segments have faced challenges and by when do you think we sort of see the weakness bottoming out and probably growth coming back and, and second on the export side also, again I think you highlighted that we also faced some tariff linked challenges which are these countries where you are sort of facing the challenge and how big they are in our exports.
Avik Roy
So thank you for the question. So to answer the first question, see today as we speak telecom exports, these contribute to about 7 to 8% of our turnover. It used to be very high once upon a time. Telecom used to be alone 10% when there was a boom of 5G rollout and things like that. But now the technology has shifted to lithium ion and therefore the lead acid volumes have come down as a share of business. So this is the business which is declining because there is a technology shift. Exports at one time, exports right now is about 5 to 6% of the business.
Used to be 8% a few quarters back. And this is basically some of the markets we just simply had to, you know, reduce our supplies because of all this geopolitical tension. We know some of our Central Asian markets, we were impacted because of the geopolitics and we developed certain products, some premium products for the developed market like US and Europe, which didn’t pick up because of the barriers. But with the announcements, what we heard yesterday, we know that yes, our customers, our distributors are ready, our product is ready. We can very soon ramp up those supplies once we see the finer details of the new tariff announcements.
You wanted to know how much is the industrial part of the business? I must tell you, I can tell you. In quarter three. The industrial ups business has grown by about 13%. Both trade and aftermarket trade and OEM put together. It is solar has grown also single digit. But solar had a negative growth in quarter two. So they have at least come back. I can see on a nine month basis solar is still at 12%. Railways and Motif power, they are doing extremely well. They have both grown double digit. So infra business, if I take telecom away, is still at double digit growth.
And regarding exports, as I said we few quarters back last year we developed homologated lot of new premium products for western market for both Europe and US which did not. The sales did not pick up immediately because of the uncertainties. But now it has bottomed out. I would like to feel because we have also found out new partners and new geographies in the meantime. And actually this tariff led disruption helped us to find out new countries and new partners, new distributors in other parts and in Europe we found out a new partner with whom we have an exclusive arrangement which we might make public very soon.
And in US also with this announcement of yesterday. I think this is a great boost for us and this makes the team energetic because the products were just waiting to be exported. We’ll find out, you know, way to increase the exports next year’s budget. Next fiscal year budgets of exports looks quite robust particularly because of the low base of this year. And there will be substantial incremental growth coming from exports. Thank you.
Siddhartha Bera
Got it sir. To follow up, sir, solar contribution of the revenues also if you can highlight and second is on the commodity side, I think last few quarters we continuously have been seeing consistent increase in commodity costs which is why we have been operating at a sort of lower gross margin. So currently if you can elaborate a bit more how what percentage of costs are yet to get passed on and if we have taken any price hike till date in the current quarter and if you can also highlight for next year what is the margin range you are targeting to achieve given the cost pressure we are seeing in the near term.
Avik Roy
Thank you. So solar at this moment is 4 to 5% of our total revenue. So that to answer your first question, secondly regarding commodities, in last previous couple of quarters we have talked about antimoney shooting through the roof and antimoney alloy which we largely use in our tubular batteries. They went from some $11,000 to $66,000 a ton. That has softened up in Q3. That has come down to about, let’s say 35,000, 33,000 as we speak. But still, year on year it is 3x, right? So it is no longer 6x but 3x. So on a Q on Q, this has come down.
But as luck would have it, team has gone up, I am saying sequential quarter silver has gone up by 50%, you all know this. And January is even higher than Q3 except for the recent fall. What you saw in a couple of days, teen has moved plus 12%, sulfur has moved plus 40% and copper has moved plus 13%. So these are the essential commodities which we use for our battery manufacturing, for alloys, as well as for making sulfuric acid. They got a big hit in Q3 and that has been further weakened by the 6, 7% increase sequentially on rupee versus USD.
So however, the cost savings, they came in very handy and that’s why on a sequential basis you see an improvement of the gross margin by 175 basis points. We have not taken any price correction in Q3 as I mentioned in my opening remarks, particularly because we wanted to pass on the entire benefit of the GST reduction to the end customer. So we had to absorb a bit of it. Some of the increases we offsetted through the cost savings initiative. But in January we have taken one round of price correction we had to take because otherwise this currency and these commodities were killing us.
So we took it in January and we hope to take, you know, stage by stage as the situation, you know, develops. We’ll see what next to do. But yes, to answer your question, we have taken a price correction in January because of this commodity other than lead, which is so essential for our battery manufacturing. So yes, I hope I have answered all your question. Next year’s margin. We would not like to give you a guidance, but during the course of conversation, probably you can make out where we stand today in terms of EBITDA margin and what is our profit pool.
Possibly we can improve by another 100, 150 basis points next year. From where we stand today, that is clearly visible, provided we get some support from lme. Yes, please. Hello.
operator
Thank you. Yeah, the next question is from the line of Binay Singh from Morgan Stanley. Please go ahead.
Vijay Singh
Hi team, thanks for the opportunity. First question is, you know, like in the presentation we talk about industrial infrastructure, railway Opportunity Data center. Opportunity, yeah. Two questions linked to that. One is that are we supplying to any of these segments today? Could you give percentage of revenue share? If so, we are doing like even for industrial you’ve given us the growth but we don’t get a sense on what is percentage here. If you could comment on that. Second is that like in telecom we see that the industry moved away to lithium and that was in a way a disruption to our business.
Is there a risk in these segments also that they later move to lithium? So to an extent the opportunity doesn’t come to us. Or are lithium facilities you are gearing up for supply to these segments also?
Avik Roy
Okay, okay, thank you. So industrial business, which is the non automotive business comprises to about 30% of the revenue. But between let’s say 30 to 32 and it used to be 32 maybe two years back now with this telecom declining, this is about 30% of the whole business. Now as I said in the opening remarks, other than telecom we see an uptick in the government spend. We saw it till H1 and we saw it some in Q3 as well. Our B2B industrial business generally comes at the late cycle of the CAPEX cycle cycle. So what we are doing right now is basically the end of the previous CAPEX cycle of the infraspend and therefore we see a strong uptick in railways, industrial UPS led by data center and also on the forklift equipment, the motif power equipment and of course industrial UPS for the oem.
Typical OEM business now the drivers are different railways, as you know, railways. They have now made a policy that they do not wait till the end of life of a battery for replacement. They have made a strict cadence that once it comes to the main workshops for overhauling, whether irrespective of the life of the battery, they change the battery because it’s such a critical equipment for their vehicle, for the train. So this replacement or overhauling regime has led to increase in tendering activity in railways. Motive power is a clearly a driver of industrial investment as well as E commerce.
This new E commerce and quick commerce businesses are throwing up lot of third party warehouses where you need material handling equipment and therefore we are benefiting out of it. Data centers, you know, I mean it’s written every day in the newspaper. Data center is a key component of increase of industrial UPS business. Is it all lead acid? No, there are segments of data centers where it is served through lithium ion. There will be segments of data centers, particularly in the enterprise data centers where there will be lead acid. So It’s a mix of both. So we are getting good orders from those.
We have a dedicated product in lead acid for data centers which is called front access. These are high power batteries and this can be accessed from the front instead from the top. So this product is picking up pretty well and well appreciated by our customers. But this data center business has a long gestation period because these are so many approval processes normally takes anything between three to four quarters from zero debt to order debt because there are multiple consultants, multiple approval processes which are involved. The only area where possibly we are developing a portfolio in our lithium ion and later on we can talk about it is the bess.
BESS largely will be served through lithium ion in India because of its footprint issue where lithium has a much better case than lithium and therefore we are developing a cell format in LSP Prismatic particularly with this end market in mind.
Binay Singh
Thank you, that is helpful. So for data centers and all how meaningful are the revenues now? Are they very small like you gave this 20% CAGRTH that I believe is for the industry that you would have given.
Avik Roy
Yeah, data center revenue at this moment as I said will be in a quarter it will be about let’s say 75 to 100 crores only data centers. But the pipeline is very strong. The number of tenders, the number of RFQs that we have received is pretty strong.
Binay Singh
And sir, just on the lithium side we earlier talked about one large PV OEM customer and then two wheeler customer. But what is the progress? When do we actually start to see commercial dispatches perm you is it this year?
Avik Roy
I’ll take the first part of the question. We have already told you that two of the four large OEMs we have been working for quite some time. Our designs and the samples got validated and well accepted by the client. We met actually we delivered more than the specifications in some cases. Now our two wheeler, that cylindrical line. Process validation, our internal validation has already started in Bangalore and we are now building cells validating it. And next step we are sending samples to our to these customers for their own testing. So that process is going on and the third customer has also meanwhile started discussion with us.
But so till last quarter there were two. Now you can say two and a half or three and the discussions are pretty positive. And the first line which will be about one and a half gigawatt we don’t see a challenge in utilizing it. Once we are through with all the process validations I’ll request Praveen who’s sitting with me to give Some more color on the timelines. Yeah. So like mentioned by Avik. So we in the lines of cylindrical line, line 1, the internal validation samples are made. Internal validation is progress and the next step will be to send the samples to customer.
What I would like to mention that we have a very close interaction with customer. We have a clear clarity what is expectation of customer. So test which are to be done is aligned and we are closely working with them. Similarly for Prismatic line we are also line three. One of the line is almost on the verge of completion of internal acceptance criteria and we will start next month the sample manufacturing which will again get internal validated and then we reach out to our customers. So I will say considerable progress has happened from last time to this quarter.
Line 4 will be our last line. So which we are able which we are planning to complete the installations and commissioning by April. And the LFP line, the Prismatic line which Praveen just now mentioned primarily will be used for three wheelers as well as you know, for the E rickshaw market where the trend again where the trend is shifting from lead acid to lithium. And this is a huge market. We have a. We will use the Excite distribution network for that and the service network and this will be faster to the market because this does not require too much of validation and homologation by the OEMs.
So therefore this will be possibly the first revenue stream from the sell side. Yeah.
Binay Singh
So sir, but even the PV OEMs and two wheeler OEMs fair to assume that commercial dispatches will be this financial year or do you think that trickles to next financial year?
Avik Roy
I mean it. Sometimes it depends on the customer also. So I would not like to say whether it is strictly by 31st of March, but plus minus one month it should happen because the testing protocols and things have been agreed and signed off. It’s just a matter of sending samples to them after we complete our internal validation and then they do it. So we are not too much concerned on whether it is a March or April. As long as you know, we are on track for that.
Binay Singh
Great team. Thanks. I’ll come back in the queue.
operator
Thank you. The next question is from the line of Vibhav from J.P. morgan. Please go ahead.
Vibhav Zutshi
Yes. Hi. Thanks for the opportunity. Firstly on the core business on telecom. Now, you know, we’ve been seeing a degrowth for some time now, for a few quarters at least. So is it fair to say that, you know, the business has now stabilized or bottomed out and you know, we can see some growth over there.
Avik Roy
So bhaiwav you know, telecom business was once upon a time, though it was not very profitable, but it was a big lead acid business for these base trans receiver stations, BTS towers. Now most of the customers, whether it’s JIO or Indus, the tower operators, they have shifted to lithium and therefore the volume has shifted. Now we are also present over there. We have supplied the large quantity to actually we were the first one to supply to Indus lithium packs. And we still have orders, we still have projections from INDUS for next fiscal year. So that business will be largely a lithium business.
This has come down. We are still executing large orders by BSNL and others, but we have a feeling that telecom will soon, telecom tower business will soon shift to lithium ion as we expected. In the past this was known and this is factored in our business plan. So right now telecom has come to only 1% of our revenue in Q3. So you can say, yes, it’s largely bottomed out.
Vibhav Zutshi
Okay, it’s just 1% of the business now. So it’s bottomed out now.
Avik Roy
Yeah, yeah, okay.
Vibhav Zutshi
Okay, that’s helpful. And on the, just a follow up on this. On the replacement demand now, again, you know, for a lot of quarters now, we’ve been seeing very strong growth. So do you expect this to continue or you know, could be, could there be like a brief phase where replacement demand could be a bit soft?
Avik Roy
See to be fair, this is, you know, we were little worried till H1 of this year because the automotive OEM business was not picking up and we were worried that what will happen two years down the line to our aftermarket. So but fortunately in H2 the market is, market has grown up, growing strongly. And by January and February projections we know that this is, this has come back because of the impact of GST and We grew quarter three by 25% which is purely led by the production growth mostly. So similarly, out of this quarter three, December was the highest.
It was plus 30. Even if I talk about this month, January, which we just now closed, it’s again in that range. So we would like to believe that since the OEM market has come back that lull which we were expecting in aftermarket after two years, I think that’s largely covered.
Vibhav Zutshi
Okay, that’s good to know. And second question is on the lithium ion business, now that you are close to obviously commissioning and commencing commercial production, any sense on the margins at least, you know, not with say the first 1.5 gigawatt hour line, but once all the four lines get commissioned, then will we make like positive Margins or how should we think about it over a period of time given that now you’re very close to starting commercial production.
Avik Roy
I think we replied to this question in the last quarter call also see what we expect is that the only difference between lead acid and lithium ion is that this is largely a B2B business. And unlike lead acid where you also have a trade component, aftermarket component. Now here with our portfolio which we are starting, we will have a smaller share of trade business which is the E rickshaw as we said. And the two wheeler business also has some aftermarket potential. Other than that it’s largely OEM driven. Now though, I’m saying oem but here the OEM margins are not like you know, the SLI batteries of lead acid.
Here this is the engine of the vehicle. So it will be lesser than the lead acid tread margins of course but it will be higher than the lead acid OEM business. So somewhere in between we expect the margins to come and we will get a lot of benefit. First of all, commodity is now indexed and it will be largely passed through which is de risking the business. But secondly, when we utilize our lines to the levels where you mentioned, you know our competitiveness and our efficiencies will actually be the driver for will be the differentiator.
We are hard, you know, we are trying very hard to improve our metal yield already on the yield in the factory and yield and raw material sourcing, these are the two biggest driver for competitiveness. On the raw material side we have been lucky that with our technology partner we have been able to access their supply chain. As a result of that we have signed a large number of master purchase agreements with the suppliers already on a long term basis. So now and this only comes because. As well as our impact of our improved yield also you know, reflects.
So with all these I think we will be able to deliver decent positive gross margin which may not be as high as you know, 30, 40% of aftermarket where you have more pricing power. But definitely it will be far better than the OEM margins of lead asset.
Vibhav Zutshi
Yeah, great, that’s very helpful to know, sir. All the best. Thank you.
operator
Thank you. The next question is from the line of Pramod Amte from Ingrate Capital. Please go ahead.
Pramod Amthe
Yeah, hi. Thanks for the opportunity. Two questions with regard to lithium. You have taken an enable resolution to further infuse equity into the business. What’s the timeline you are looking for that 1400 crores to be consumed first. Second, also related is there has been lot of senior level exits in that business, how does it impact your operations or the medium term business profile?
Avik Roy
So to the first question. So we have in the January board meeting we got an approval from the Excite board for infusing 1400 crore to exide energy for the full fiscal year. That’s the approval we got. But how much we invest in which part of the year or which part of the quarter will be decided by the need of capital. So this will be. I will hand over to Manoj to explain the utilization and then I’ll come back to the next question.
Manoj Kumar Agarwal
Hi. So the idea of this funding basically as we said earlier also to ensure that our leverage is lower in ESL and second because we are going into a commissioning mode, SOP mode. So this funding is basically mix of both payout of capex spending capex and to manage the working capital requirement. This is what we have kept for the next year for esl.
Avik Roy
Thank you. So regarding the senior level exits first of all you have to understand this industry is a new industry and there is a lot of. You know there will be a lot of poaching and migration of talents because there is very few talent who are competent enough in this country which are available. So we are aware of that. This is not only happening with us because we are also hiring people from other similar adjacent industries at the senior level. So whatever you have heard something was very planned. It was already planned and that is why you saw that the day the exit happened the same day the successor has been announced which only shows that we have been planning and preparing ourselves.
So this is part of the leadership journey for a new industry. There will be churning happening and there will be lot of movement of senior leaders because they are in demand now in the country. But like we’ll have exits, we’ll also have leadership entries. I’m sure about it. Sure.
Pramod Amthe
And the similar follow up is it’s good to know your products are getting accepted and you are delivering better than the expected performance. On the lithium ion side are you now close to. And since you’re also talking about gross margins are you now close to the finalization of pricing? If that is so how does it compare versus import? Because that’s the threat which everybody was looking at. It’s very difficult to make money versus the import pricing. Would you give some color in terms of the pricing negotiation with the customers, how they are looking at.
Avik Roy
So I told you in the last quarter I think this question again came up and I will repeat the answer which I gave. It’s a bilateral negotiation. There is no Standard formula. Whether it is import parity, whether it is cost plus, it’s a mix of both. So it varies from customer to customer. And this is an ongoing process. I will tell you only thing is that we have some temporary. We have to look at it. But we have to see that the imports. We just heard that the imports are getting little costlier because of withdrawal of certain duties by China.
This will have a positive impact on us because at least it will help us to reach import parity faster than we thought. The percentages you are aware, so I’m not mentioning so to that extent. But I would like to believe that for Indian supplier of sales for the OEM customers it will not. It will not be the price factor only. I strongly believe having a local supplier with big capabilities and helping me to receive the material on daily basis or you know, size a week basis and then operate at a 24 hour or 48 hour inventory.
This is a great value for any OEMs. We have seen in our other lead acid OEM business that they operate. They sit in our factory and take every day’s quota. This kind of value cannot be delivered by import because there you have to keep minimum three months to four months of inventory. And when you do that, first is there is a the risk of quality because you can see surprises after two months when you start using that product number one. Secondly also the volatility of the valuation of the inventory because the lithium prices are fluctuating so much.
You may be sitting with a high cost inventory for three months and suddenly realize that after three months the prices have fallen. So these are the values I would like to believe that our OEMs will and still see in a local supplier which can be largely solved by people like us. Yeah, sure.
Pramod Amthe
Thanks and all the best.
operator
Thank you. Before we take the next question, a request to all participants to please restrict your question to two per participants. For more question, please rejoin the queue. The next question is from the line of Raghunandhan from Nuvama Research. Please go ahead.
Raghunandhan
Thank you sir for the opportunity. Firstly, can you indicate how much was the price increases taken in January? We hear from dealers that there was a 2% price hike taken and post the price hike. Is there still any under recovery?
Avik Roy
Yeah, so you’re right. We have taken a 2% price hike in January right now as we see because two days back the metals have crashed. We do not know, nobody knows the impact unless you cross the bridge. So I cannot forecast what will be the percentage recovery going ahead. But in December we were Thinking that, sorry, December we were thinking that we will be able to pass on the whole increase in January which decline could not happen because this is also a function of competitive strategy. So but we passed on 2% and hello. And we’ll gradually see how we can pass on the remaining impact.
But to assess that impact the metal prices need to be, need to stabilize.
Raghunandhan
Thank you. Sir, can you indicate for investors you are looking at a positive growth in the upcoming quarter. Can you broadly indicate the revenue share of inverters?
Avik Roy
Yeah, see as a share obviously by inverters. It’s a season time. The season picks up from mainly from March and moves to July unless there is a early summer onset this year, which I cannot predict. From March to July the inverter volumes go up by almost 3x with respect to off peak which means whatever volumes you see in December, normally The May volume is 3x of that. That’s a typical cycle and that is why you will see the quarter one of excite is always the highest in revenue. So we expect the same to happen this year because last year because of early, you know, onset of monsoon and a very prolonged monsoon we did not get that benefit so much.
But I’m sure this year the season will pick up. Normally in a season time the share of inverter is about 25% of our revenue.
Raghunandhan
Got it sir. And on a full year basis would it be like 15 to 20% broad range?
Avik Roy
Yeah, you are right, about 20%. Yeah.
Raghunandhan
Got it sir. And how much would be the current price of imported LFP and NMC sell? There has been increase in the underlying commodity prices recently and there is also the reduction of the export rebates in China. So broadly, can you indicate how much has the lithium prices gone up in the recent times?
Avik Roy
I think this is, this information is available in the public domain so I, I cannot give you a specific information for excite. I’m sorry.
Raghunandhan
Understood, sir. And in the initial lithium capacity what would be the mix of LFP and NMC?
Avik Roy
For us it will be half of 50. Yeah. So let Praveen answer this.
Pravin Saraf
Yes, it will be. Thank you. So it will be 50%. So out of 6 gigawatt. 50%.
Raghunandhan
Thank you sir. Lastly, can you indicate the share of revenue from two wheeler and four wheeler OEM and replacement segments?
Avik Roy
Yeah, yeah. The ratio for Automotive replacement to OEM is as we speak is about between 73 to 75% in trade and 25 to 27% in automotive. So that’s how it is. Yeah.
operator
Sorry to interrupt sir, can you please Rejoin the queue for more questions as there are more participants left in the queue.
Raghunandhan
Sure, I’ll do that. Thank you so much.
operator
Thank you. The next question is from the line of Mumuksh Mandlesha from Anand Rathi Institutional equities. Please go ahead.
Mumuksh Mandlesha
Yeah sir, congrats on the commencement of recently on the cylindrical line capacity and the new OEM wins. I just want to understand Q3 the gross margin expanded 220bps. Is it mainly due to inventory change and the antimoney prices coming down and. Any other reasons Also
Avik Roy
Antimoney prices though it came down but this is not an inverter season. Antimoney is generally used for the inverter batteries. It is tubular. So the volume of take of antimoney also for us came down. So we will get the real benefit of this in the peak season time which is just coming up. And in Q2 if you recall our discussion we took a very conscious effort to cut our production to cut our inventory and manage working capital. That is why we generated about 500 crores of additional free cash. So we are more or less at the same level of inventory at Q3 and also because Q3 the production went up and therefore the working capital requirement also went up maybe marginally higher.
Mumuksh Mandlesha
So that played out on the gross margin for this quarter. Right sir?
Avik Roy
Yes, yes, yes.
Mumuksh Mandlesha
Got itself RM side. If you can help us what could be the RM mix cost for the some of the key elements like tin, silver, sulfur, copper, sulfuric acid Just broadly help us understand what kind of RM mix they contribute to us.
Avik Roy
So I should not be giving you the exact percentages which is little technical and but I can tell you teens silver sulfuric acid is required across the whole revenue base because that’s the lead acid battery. Right. It’s required for all kinds of batteries. So 100% revenue coverage you need sulfuric acid 14 silver is required mainly for our automotive batteries where the growth is higher but at the same time the commodity cost is also increasing. Anti money is required for our tubular plate which is our inverter battery. But the prices are softening but it’s also the off peak season so I think this is the best that I can share with you at this moment.
Mumuksh Mandlesha
Got it sir. Finally what would be the battery packs? Revenue and anything on the capex for this year and next year Sir.
Avik Roy
So I’ll leave this to Praveen to answer. Battery packs? Yeah. 98 crores.
Pravin Saraf
Yeah. So it is 100 crores right now. Yeah. In the first nine months. Any capex in battery pack? No. Right.
Avik Roy
Now so right now we do not plan anything because pack capacity can be done through your efficient supply chain management also. So we have 1 1/2 gigawatt hour worth of pack making capacity in Gujarat. So we’ll stick to that till we make a further decision.
Mumuksh Mandlesha
And just continue on this. Overall, how do you see CAPEX for FY26 and 27 including the lithium and the lead, Sir?
Avik Roy
So As I said, 1400 equity we have planned for lithium. 1400 and we’ll have about another 500 roughly for lead acid core business. That is what we do every year. Because that’s. So we have a strategy policy to you know, invest back to the business about same amount equal to our depreciation which is around that number.
Mumuksh Mandlesha
Thank you sir for opportunity. Thank you.
operator
Thank you. The next question is from the line of Sangeeta from Cogito Advisors. Please go ahead.
Sangeeta Purushottam
Yeah, hi, can you hear me?
Avik Roy
Yes please.
Sangeeta Purushottam
Hello? Okay, thank you for the opportunity. So what I wanted to get a sense was that you know, when we’re looking at the impact of raw material prices on our margins, all our competitors would also be facing similar impact. So where does the competitive pressure come from which really prevents you from passing on these prices for the. Or is it just a question of a lag effect in passing them on and over a period the entire industry passes it on? That’s one question. My second question was that just like iron fluctuations seem to be a key risk to your margins in your lead acid business.
What would be the main risks that you see in the lithium ion business?
Avik Roy
Thank you. Thank you for the question. To answer to the first part that you know the entire industry will be affected then why not everybody take a price correction? I am also hunting for the answer for the last many years. Sometimes it happens that somebody follows the other. Sometimes it does not happen because I think both the sales forces are fighting for the shelf spaces on the counters of the distributors or dealers or sub dealers. So possibly this has not happened. But if you see the history, Excite has always been the first one to take the price correction.
At least for the last five years that I have been in the industry. And irrespective of whether someone follows or not, we used to pass on the. We never took unless there was a cost pressure. That’s clear. So whenever there was a cost pressure we were the first one to announce price increases. And you know, the secondary checks reveal that. So how. What kind of commodity risks you see in lithium ion? See, lithium ion as I mentioned is largely a B2B business. Like in our automotive OEM, the prices are largely indexed. So our main problem of cost push comes in the trade market in terms of input increase.
But generally lead, at least the prime item, which is lead, it is indexed through a formula with our OEMs. So similar thing will be indexed in lithium ion also, at least for the main, main component, main raw material.
Sangeeta Purushottam
So does that mean that the margins in lithium ion will be more stable?
Avik Roy
Should be, should be, should be. And if it is only material, if it is only material driven than should be. Logically, unless there are some, you know, duty mismatch of, you know, country versus country, some country, we get duty benefit. But as far as the prime index is concerned for material, it should be same for all.
Sangeeta Purushottam
And sir, if I can squeeze in one more question. You know, if you look at the different segments of your business, the sense I’m getting is that, you know, a lot of the areas where you feel pressure are actually bottoming out. There are tailwinds in many of the segments that you operate in. Now if you put all of this together, what kind of growth number should we top line growth should we look at for next year?
Avik Roy
I think on the core business we will fight very hard. But I can see the market will give us opportunities to grow at a very high single digit to early double digit for sure. Because once I add back, once I add back the declining businesses, that is where we come in. Because As I mentioned, 92% of our business in this quarter grew by about 12%. So if I can fix the balance, 8% to that level. So we should at least come to double digit level.
Sangeeta Purushottam
Okay, thank you. Thank you very much.
operator
Thank you. The next question is from the line of Preet from Incred amc. Please go ahead.
Preet
Thank you for the opportunity. I just have one question. I would like to know the margin differential between OEM and aftermarket business.
Avik Roy
No, this is not in public domain. I’m sorry, but you can do your. Because you know, this is stacked margins in the channel margins also add up. So you may do your secondary check, sir, but it’s not fair for me to share this.
Preet
Thank you.
operator
Thank you. The next question is from the line of Sukriti Patel from Eastside Fintrade Private Limited. Please go ahead.
Sukrit Patel
Good afternoon to the team. My first question to Mr. Roy is first of all, thank you for the detailed commentary. Just want to understand this. Beyond what was covered in the opening remarks across Excite’s core LED asset business and the newer energy storage initiatives, how does the management decide where to prioritize Capacity, capital and management attention as market conditions evolve, as you track the business, what changes in customer demand, product mix or competitive intensity typically signal the need to rebalance these particular set of things. I want to understand your view on.
Avik Roy
This so I’ll give you a broader outline. Xcient is in this business for the last 78 years and it has been a market leader since then. This is not a pompous statement. I just wanted to make a point that we have a very well laid out method of allocating capital and we have done it in the past and we’ll continue to do that. And all these 78 years we have been positive and we generated positive cash flow and we remain debt free touchpoint which means we were largely funding our investment through our own accruals. So that is, that has been our strength and that should remain our strength going forward.
Also now how we allocate capital of course in the last three, four years we decided though laid asset is a very mature, supposed to be a very mature technology or mature business we should constantly look for opportunities for capacity expansion for the future and to bring out new products. And the capex should be around the depreciation amount every year for the core business. So that has been a policy and we worked on various areas. In some areas we expanded, in some years we expanded capacity by investing and in the last two years we were investing heavily on manufacturing technology to achieve cost competitiveness, cost excellence and if you look at my our last disclosures on the last few quarters, you will read more about it.
So last two, three years we have been focusing more on manufacturing technology. We were putting up new machines to achieve cost competitiveness and quality improvement which has largely been completed. And now we have taken the phase two for the next few years. The second area of capital allocation is. I think there is a noise somewhere in the background.
Sukrit Patel
Sorry, I’ll just mute myself.
Avik Roy
Yes please. So the first principle was investing in manufacturing technology to gain competitiveness and quality improvement. The second area of our capital allocation is on automation, factory automation mainly and we have been investing for the last two, three years in lot of automation in our factories to improve productivity. And third is of course investment for tomorrow which is the lithium ion project. And therefore we are very bullish on this project that we have to be future ready. So with core business reaching its desired competitiveness in terms of capacity as well as automation and a big equity infusion to make us ourselves future ready for lithium ion business that has been the domain of our capital allocation.
Sukrit Patel
Thank you. My second question is to Mr. Agarwal, same similar question from a monitoring point of view and the outlook beyond the margins discussed, what are the key internal indicators you track closely such as raw material passing through mix shifts between automotive and industrial segments or working capital trends to assess profitability and cash flow sustainability before these trends show up on the balance sheet. I understand your point of view on this. Thank you.
Manoj Kumar Agarwal
Thank you for the question. So see the. It’s a mix of everything. So we see the trend of mix also what is the trade and OEM mix, right. How the entire metal family is going on. As we said, that entire metal family from last two, three quarters is, you know, going into a skyrocket. Right. And then we also see how to manage our cash now in quarter two also we have said the same thing because of the uncertain market because gst2 the call we have taken in management that will not accumulate inventory but focus on cash.
So in order to the idea was to focus on cash to manage inventory. Then we again ramp up in quarter three with the fact that entire momentum has shifted to the demand side because. Because GST2 and hence we again move to the growth story where we talk about running the factory full capacity. Right. Again having eye on the cash management as well. So if you see our H1 numbers also the cash management improved a lot if you compare to March. And then we monitor basis the entire metal indices to see what is the market capacity to absorb the price increase.
And hence we have taken the first price increase in January also. Right. So this is the levers we see. Apart from that the huge focus on the cost optimization. So there are a lot of program goals. How can we save money? How can we optimize resources to ensure that we bring benefit into the bottom line through the cost effectiveness? That’s what we do.
Sukrit Patel
Thank you and best of luck for the next quarter. Thank you.
operator
Thank you. The next question is from the line of Abhishek Kumar from Nesty Wealth.
Abhishek Kumar
Yeah. Thanks for the opportunity. Given the move towards high density and high reliability power solutions in hyperscale and edge data, how is exide evolving technologically to capture this opportunity?
Avik Roy
So as I mentioned, there are multiple tiers of data centers from a hyperscaler to a colo. To an enterprise. And based on the reliability of power required, the level of redundancy of UPS is decided. And more the redundancy which means the shorter or tighter the footprint and the tighter the footprint means higher energy density and therefore where lithium ion plays a better roll that lead acid. But there are all because in that case in those cases real estate, it’s real money. They save real estate some footprint on reducing footprint. But there are data centers of various tiers where footprint or energy density is not an immediate value.
It’s the reliability of the product and performance because the redundancy requirement is not as high as let’s say hyperscalers. And we see their demand coming from lead acid business for lead acid batteries. And that is where we have our, what we called our EHP series which is the high power series as we call it and with front access. So so far we are the only one. We have it in India and it’s doing reasonably well I would say. But a lot of RFQs are also pending. So data center is not only. Please don’t look at only the metas and Googles of this world.
There are various data centers are coming up in various shapes and sizes and various scales.
Abhishek Kumar
Yeah, okay, thank you. And is the company looking to have some kind of alliances with data center developers or cloud operators, something like that to capture the opportunity.
Avik Roy
So we are in constant touch but they are generally our customers and we want to remain a supplier and one not get into a partnership mode and expose ourselves more. Because if I go with one then I have five other customers who might not be happy with that. So we would like to stay as a supplier to all the customers.
Abhishek Kumar
Okay. And just last one, the excise excite. How does the in terms of competitive risk from global power solution providers. How company is trying to insulate and to defend and grow its revenue share, market share.
Avik Roy
So at this moment you are talking about our core business or lithium ion?
Abhishek Kumar
Lithium ion in terms of the Global Power Solution OEMs and UPS batteries coming to India.
Avik Roy
Frankly speaking, if you have, if you look around we have not seen much of movement of global players setting up cell manufacturing capacity of lithium ion in India. The people who have taken the maximum steps are all Indian industrial companies. You name us and you know, three or four other names. They are all Indians. So we have not seen that kind of a, you know, effort by a global company to come and set up. Maybe they still want to wait and watch number one. And secondly Chinese ultimately they are so much dependent on China for their competitiveness.
Maybe they are not taking any risk. I have not heard, I don’t know whether you have heard any global company planning or announcing to set up a.
Abhishek Kumar
Because. Because like the budget thrown is lot of like taxation, holidays and also maybe a lot of company will start comparing contemplating now.
Avik Roy
Yeah but for lithium and battery I think a lot of industrial, large industrial houses in our country have also committed their investments. So they will also receive similar kind of support, I’m sure.
Abhishek Kumar
Okay, thank you. That’s it from the side.
Avik Roy
Thank you. I hope that was the last question.
operator
Thank you, ladies and gentlemen. That was the last question for today. I now hand over the conference to management for closing comments. Over to you, Sukhar.
Avik Roy
So, thank you. Thank you, everybody. It was a very engaging conversation we had. I hope you have been able to answer all your questions satisfactorily. If you have any further questions or if you would like to know more about the company, we would be happy to be of assistance. Thank you very much. Over to the moderator.
operator
Thank you. On behalf of Excite Industries, that concludes this conference. Thank you for joining us. And you may now disconnect your lines. Thank you.