E-rickshaws (ER) are proliferating like anything in small towns with populations as low as 30000. I casually checked with one ER owner whether he is using Chinese/ local battery and he was quick to response that all ER use only Exide/ Amaraja. Local batteries are not able to hold charge for long. For me this speaks of potential opportunity. At another place I read now even fork lifts are battery operated. So, for me opportunity is large and uncertainty about future of battery may be an opportunity in disguise.
I had been a patient investor in this stock but the movement has been very slow from the past 1.5yrs .
Reading through the AR and their financials , i dont see anything out of order.
If anything they seem to be increasing their reach big time.
Any idea about this stock, anyone?
Negative sentiment… Amazing company but bad stock. Hold them for 3-4 years, eventually people will notice the earnings growth. Thing is investors are disgusted with exide as they allowed amara raja to take market share and did nothing about it. They then went and infused capital in an insurance business. Alternatively they could have expanded capacity at that point and held off amara raja with ease. To add to that lead prices are going up, yes they can pass this on to their buyers as there is a clause which makes them pretty much immune to lead prices, but who does any research these days huh? Anyway all this is the past now, and this sentiment has to change. We are getting a discounted valuation on these guys, an insurance business that is fully capitalised and some sectorial tailwinds. Only issue is the EV part of it. I think people are scared of that. Will exide invest in the space? Or futher expand capacity in lead acid? Mgmt. has said if demand is there, they will invest in EV batteries. Tech tie ups are being made and they are taking steps. Overall a wait and watch 3-5 year story. I think you can make a nice 18-20% CAGR with low risk and some re-rating. Right now in this market, any stock that doesnt generate 35% CAGR will be sold by every investor.
Exide to make EV batteries.
This is not only an inevitable move but something that I am sure even Amara Raja will also get into. The technology for EV is available through tie-ups and these entrenched players have the distribution already setup in India.
Looking at the PL and Balance sheets i see that they have made good top line but it isn’t translating into Profits.
I’m not sure why. Any opinions guys.
Secondly what i observed was that their revenue growth has been spectacularly even
But the price action hasn’t been much. I"m a bit confused if i have to stay invested or not.
Can someone please pour some light on this
High revenue not turning into great profit is the reason of high Lead price around 60% goes in raw material. Increasing price to OEM is always difficult.With increasing improvement in Lead acid battery technology the replacement cycle is getting longer. Both Exide and Amara have product in market with minimum 3 year warrenty period.Sluggies demand from Telecom base station, Jio has rollout its network on Li-ion battery and telecom tarrif is at multi year low due to Jio entry.Suzuki is setting up Li ion manufacturing unit in Gujarat.So all these having effect in Exide and Amara.Recently lme lead price has come down companies have taken multiple price hike,gst roll out, increasing cv sales , solar industry,e rickshaw will start to show up in upcoming result.But technology disruption and move to li-ion ,I am not sure.Need to wait few years beyond 2020 to get clear picture.Lithium supply itself a issue.
Suzuki coming up with the battery plant is going to be a big disruptor for exide and amararaja, if the Maruti cars are going to be powered by the suzuki batteries. They are planning to make lithium batteries for starting application for the Swift. Iam sure other Japanese manufacturers will also have an inclination to buy from them. This will be an ideal base for them to launch the batteries for the future EV’s.
Some more info on the new plant and its implications that i could gather
- Joint venture between suzuki,toshiba and denso, plant should be ready in Gujarat by 2020.
- All models including swift and above will have lthium ion battery supplied by this factory from 2021. This takes out a sizeable OEM market for Exide and Amara. Toyota also could follow.
- Suzuki plans to roll out electric scooter with batteries supplied by same plant.
- At present lead acid is cheaper, however the economics are expected to change.
- This plant will also supply the batteries for the EV’s expected to be launched by Maruti, which might come out sooner than expected as they always try to stay ahead of others.
Iam invested in both Exide and Amararaja.
ISRO passing on its Li-Ion technology for only Rs. 1 crore.
Intention is for the betterment of industry.
Not sure., how is the practical applicability of this technology., but it has received an overwhelming response from prospective buyers.
Link attached below
Positive for the EV segment.
Exide quaterly result is out:
Also found this:
Look like India is gearing up for EV market.
Here is the concern. A lead acid battery costs nothing for a car manufacturer hence it makes sense to outsource this component to an OEM company like exide/amararaja. But the for an EV the battery cost is 25% of that of the vehicle. So it suddenly makes sense for the car company to manufacture the battery in house. We will have to see how this plays out.
This is a very valid concern.
& i feel this point is going to be very crucial in the future., specially for the battery manufacturers.
That is a good point. Will try to cover that aspect a bit here.
The list of EV battery manufacturers can be found in the Wiki link here. If there are battery suppliers, seems like the EV manufacturers are willing to collaborate with them. Currently, we don’t have a strong player in Lithium battery manufacturing in India.
Few points that I thought are worth mentioning:
- Given the complexity in terms of manufacturing Lithium batteries and safety, it is likely that the EV manufacturers would rely on another established entity to manufacture these batteries.
- Global EV battery leaders are all foreign entities. The EV manufacturers could setup a joint venture with these entities. Else, the Indian leaders like Exide could setup a JV with other players (which is already happening)
- India is not having Lithium resource and would depend on China, Australia etc. Hence, we either import Lithium and make the battery in India or import Li Battery itself.
- Any safety issues in terms of battery explosion etc. would significantly affect the brand. Lately, there are increasing news in terms of personal mobility vehicles (segway kinds) catching fire when charging.