Exide Industries is well known company and already many have written expert threads over here. Few important points to take a note as per May-2023 con-call:
There is a general pessimism on terminal value of lead acid battery business after EV. But management clarified that “Every EV requires 1 auxiliary battery, which is lead acid battery”.
Though company is not beneficiary of PLI scheme, in India seems they are early adopters to Lithium Iron cell technology and ahead of competitors as of now.
Note - Company corrected its historical diworsification mistake by selling off insurance business to HDFC Life Insurance. So corporate action seems to be good.
Question - Does this company is showing optionality element, as seems its current business may not get disturbed but company may also accelerate in new technology? Valuations also seems to be reasonable.
Exide created a new subsidiary called Exide Energy Solutions Limited (EESL). They initially invested Rs. 1,530 crore in EESL to set up a greenfield Lithium-ion cell manufacturing facility in India.
Now, the company plans to invest an additional Rs. 1,100 crore in EESL. This investment will bring the total equity investment in EESL to Rs. 3,000 crore.
The assumption of “Every EV requires a auxiliary lead acid battery” is a bit unrealistic. My be the lead acid 12V batteries will go , the current constraint is legacy low voltage design architecture. (subcomps that are designed for legacy 12V system)
But for an EV it looks like a burden, because , in spite of having a large HV pack , we have a 12V lead acid battery and a DC2DC converter (to support legacy LV architecture). may be in India it might happen slowly, but there is a possibility it can happen fast, because at the current state of EV technology , the electric cars are unaffordable, so large optimization will happen from what Tesla has industrialized.
Meanwhile, I think Exide is expensive, considering its single digit profitability, high capital intensity, very little growth and uncertainty of future market for its current legacy products…
Hyundai Motor Company and group firm Kia Corporation have signed a Memorandum of Understanding (MOU) with Exide Energy Solutions Ltd, as part of their electric vehicle (EV) expansion plans, Hyundai Motor Group said in a statement.
Hyundai Motor and Kia aim to localise their EV battery production, specifically focusing on lithium-iron-phosphate (LFP) cells in line with the expansion of their EV plans for …
