On Wednesday, Investec updated its financial outlook for Exide Industries Ltd. (EXID:IN) stock, increasing the price target to INR576.00 from the previous INR545.00, while reaffirming a Buy rating.
This adjustment follows the company's first-quarter financial results for fiscal year 2025, which reported an EBITDA of Rs4.9 billion, marking a 14% year-over-year increase but a 4% decline from the previous quarter.
The company's recent financial performance fell approximately 15% short of expectations, primarily due to a combination of higher raw material costs, which rose by 5% quarter-over-quarter, an unfavorable product mix, and limited benefits from operating leverage.
In response to the increased costs of raw materials, Exide Industries has implemented selective price hikes. These measures are expected to mitigate the impact of these cost increases, particularly since about 30% of the company's revenue comes from institutional business, which typically experiences a delay in the pass-through of raw material price increases.
Despite the lower-than-anticipated EBITDA margin, which came in at 11.5% compared to the estimated 13.5%, Exide Industries continues to demonstrate robust revenue momentum, propelled by volume growth in the automotive and industrial segments. The company's export portfolio has also seen positive developments, driven by a resurgence in end-market demand.
Exide Industries is progressing with its lithium-ion cell manufacturing, anticipating the commencement of commercial production by the end of fiscal year 2025. The management's current focus is on attracting customers in the mobility and stationary segments and enhancing the supply chain for its cell business.
The firm's strategic partnership with SVOLT, strong balance sheet, and technological collaborations underpin Investec's preference for Exide as a leading player in the transition to lithium-ion cell manufacturing.
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