Exide Industries Ltd Q2 FY23 Earnings Conference Call Insights

Key highlights from Exide Industries Ltd (EXIDEIND) Q2 FY23 Earnings Concall

Q&A Highlights:

• [00:06:58] Jinesh Gandhi from Motilal Oswal asked about any updated on the cell manufacturing capacity being put up in terms of initial capacity and ramp up timeline. Subir Chakraborty MD replied that the plant is being setup on about 80 acres of land and conceptualized in two phases. In Phase 1 EXIDE will have 6 GWh capacity and Phase 2 another 6 GWh. Phase 1 start of production is expected in 2024. Overall capex is INR6,000 crores, of which around INR4,000 crore will be spent for Phase 1.

• [00:14:04] Siddhartha Bera from Nomura asked that on the lithium ion plans, on the customer side, which segments, EXIDE will be targeting in Phase 1. Subir Chakraborty MD answered that the company is targeting all customers; two-wheelers, four-wheelers, e-rickshaws, and stationary application.

• [00:14:39] Siddhartha Bera from Nomura also enquired about the capex funding for the lithium ion plans. Asish Kumar Mukherjee CFO replied that the financing of INR6,000 crores will largely come from internal accruals from equity infusion from EXIDE and whenever a bridge financing is required, EXIDE will take it from banks etc.

• [00:18:07] Siddhartha Bera from Nomura asked about the current capacity in two wheeler and four wheeler battery and any expansion EXIDE is planning to take in next 1-2 years. Subir Chakraborty MD replied that the company has adequate capacity right now. Currently, the company is not planning any greenfield facility.

• [00:19:40] Ashutosh Tiwari with Equirus asked about the breakup of volume and value in the 13% YoY growth in 2Q23. Asish Kumar Mukherjee CFO replied that it has been a double digit growth in both volume and value.

• [00:24:42] Subham Agarwal with Aequitas Investment asked about the company’s current capacity utilization. Subir Chakraborty MD answered that the company is clocking between 85-90% currently.

• [00:25:20] Subham Agarwal with Aequitas asked about the reason for the decline in sequential revenue growth. Subir Chakraborty MD said that the reason is that the home UPS batteries in 2Q always show a decline traditionally.

• [00:35:25] Aditya Jawhar from Investec asked  that in the lithium-ion cell manufacturing facility, what’s the plan to scale up manufacturing in terms of more value added things. Subir Chakraborty MD answered that initially, EXIDE is looking at NCM and lithium-ion phosphate. And on format, there is cylindrical cells, prismatic cell, and also blade in future. And margins should be similar to led acid battery business.

• [00:41:22] Pramod Amte of InCred Capital enquired about Nexcharge, if there is a commitment to supply or source cells from Nexcharge. Subir Chakraborty MD answered that EXIDE has absorbed all the technology already. Also there is no plan to source any cells from Nexcharge as it’s not feasible.

• [00:45:42] Vibhav Zutshi with JP Morgan asked about the aspirations for exports going forward and if it will be an opportunity for pricing and ASP improvement. Subir Chakraborty MD said exports present big opportunity for EXIDE. EXIDE added that it’s well placed in this and growing rapidly seeing good prospects.

• [00:50:09] Pramod Kumar from UBS Group asked about the investments in the EV side and the workforce EXIDE has dedicated to the lithium ion project. Subir Chakraborty MD answered that the company has already completed the top tier recruitment and other recruitments are in place.

• [00:54:12] Navin Sahadeo with Nuvama asked about the technical collaboration agreement terms with SVOLT. Subir Chakraborty MD replied that the details cannot be revealed, but overall it is a standard technology license agreement where there is an upfront payment and a royalty payout.