Kotak Securities on Exide

Kotak Securities review of Exide Q2 performance indicates pressure on legacy business and limited near-term valuation comfort.

Kotak Securities on Exide: Weak Q2, Market Share Losses Continue Despite LiB Potential

Kotak’s View on Q2 FY26: Key Concerns Rise

Exide’s Q2 performance disappointed Kotak Securities, driven by inventory correction post-GST cuts and under-recovery of fixed costs. The broader concern remains the continued erosion of market share in the core lead-acid segment — an issue that has persisted over multiple quarters.

Core Highlights from Kotak’s Analysis

• Q2 revenue and EBITDA were below expectations, impacted by GST cut-led destocking.
• Lead-acid category continues to lose share — a structural concern for the stock.
• Margins were hit due to inability to fully absorb fixed costs.
• Management commentary cautious on near-term volume visibility.
• Long-term positive: significant traction building in Li-ion battery (LiB), where Exide is well-positioned.

Kotak believes the LiB opportunity remains promising, but the transition will take time to materially move the earnings needle.

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SWOT: Kotak’s Structured View on Exide

Strengths

• Strong Li-ion roadmap through Exide Energy.
• Healthy balance sheet supports future capex.
• Deep distribution reach in automotive and industrial batteries.

Weaknesses

• Market share loss in lead-acid accelerating.
• Fixed cost absorption impacted by destocking.
• Mixed demand environment across segments.

Opportunities

• Rapid EV adoption expands demand for LiB cells & packs.
• Possible government incentives under PLI and localisation policies.
• Industrial UPS growth stable with rising digitalisation.

Threats

• Rising lead prices may squeeze margins if not passed through.
• Competitive intensity remains high in auto-replacement market.
• Lag in LiB monetisation could weigh on valuation.

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Investor Takeaway

Kotak Securities remains cautious on Exide due to persistent market-share losses and a softer quarter driven by GST-related destocking. While LiB offers long-run optionality, near-term valuations look stretched unless core metrics regain momentum.

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SEBI Disclaimer: The information provided in this post is for informational purposes only and should not be construed as investment advice. Readers must perform their own due diligence and consult a registered investment advisor before making any investment decisions. The views expressed are general in nature and may not suit individual investment objectives or financial situations. Written by Indian-Share-Tips.com, which is a SEBI Registered Advisory Services.

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