Exide Industries Limited (EXIDEIND) Q3 2026 Earnings Call Transcript

Ladies and gentlemen, good day and welcome to Excite Industries Q3 F526 Earnings Conference Call hosted by Investec Capital Services. As a reminder, all participants' lines will be in listen-only mode and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during this conference call, please signal an operator by pressing star then zero on your touch-tone phone. Please note that this conference is being recorded. I now hand over the conference to Mr. Aditya Jawar from Investech Capital. Thank you, and over to you, sir.

Yeah, thank you. Good afternoon to you all. From X-Tide Industries, we have with us MD and CEO Mr. Abhik Roy, Director of Finance and CFO Mr. Manoj Kumar Agarwal, Mr. Praveen Saraf, MD and CEO of X-Tide Energy Solutions, President of Legal and Corporate Affairs and Company Secretary Mr. Chitinder Kumar. Before we proceed, here is a disclaimer for the call. Few statements by the company's management in the call may be forward-looking in nature, and we request you to refer to the disclaimer in the earnings presentation for details. We will start the call with a brief opening remark from the management, followed by Q&A session. I would now like to invite Mr. Avik Roy for the opening remarks. Thank you, and over to you, sir.

And the board of excited Thank you. Overall macroeconomic scenario in Q3 was positive driven by low inflation rate, low repo rates, and all contributing to increased purchasing power of the end customer. Coming to the performance of the company during Q3, nearly 92% of the business has grown by around 12% on the top line. Within this, auto OEM, auto auto market, industrial infra, and the inverters continue to contribute to growth. Industrial infrastructure performance improved year-on-year basis, order flow, and execution picked up in B2B sectors like railway, traction, and industrial UPS for OEMs. The headline growth numbers still remain muted because 8% of the remaining businesses had a strong decline, namely our telecom business as well as the exports business. This led to a total 5% year-on-year sales growth during the quarter. And this was the first ever Q3, which is supposed to be our smallest quarter. First ever Q3 where we crossed our top line of 4,000 crores. Our domestic growth, ex-telecom, is at 10%. In Q3, the company ramped up production, leading to higher capacity utilization and positive impact on the bottom line. Cost pressures continued due to increase in raw material prices, especially the metals we use for our alloys, silver, tin, copper, and sulfur for sulfuric acid. They were at near their all-time highs. Wickening of rupee against dollar added further pressure to the input costs. This project helped improve the gross margin by 175 basis points on a sequential quarter basis. In this case, the company was able to maintain the year-on-year EBITDA margin at 11.7% for Q3, buoyed by strong volume growth, improved product mix, better realization, and benefits occurring from the various cost excellence projects. All the above efforts have resulted in expanding the EBITDA margin on a sequential quarter basis by 220 basis points. Pre-tax profits, if I take out the one-time impacts of both last year's quarter 3 and this year's quarter 3, is that plus 12.8%. Looking at the January numbers, this momentum is expected to spill over into Q4 as well. Solar verticals return to growth trajectory after the extended monsoon and the GSP-led slowdown in Q2. Industrial infra continued to deliver double-digit growth on a year-on-year basis. Tariff uncertainties and geopolitical tensions continue to impact the exports business and it's still a work in progress. We expect the situation to continue in similar trend in Q4, and given the announcements which we heard last night, it only gives us more hope that those markets where we were struggling due to tariff barriers will open up. As we enter the last quarter of FY26, the outlook for the lead-acid business remains positive across most business verticals due to uptake in automotive OEM demand, growing aftermarket Thank you. And rising power backup demand from customers. Some of you may have noticed this quarter we have just launched AGM batteries for premium passenger vehicles. We will soon be announcing launch of our ultra and power box range of inverter batteries, catering to premium and economy segments as well, as well as solar grid tie inverters. In addition, we have Also, supported Tata Sierra petrol model and the new domestic Kia Seltos model as 100% supplied to these two SKUs of our customers. I am told both these SKUs, both these models are doing very well in the market. I believe that Exide, with its advanced product portfolio, Pan-India distribution network and strong brand recall, will continue to benefit from growth opportunities. Moving on to the lithium-ion cell manufacturing project, we have invested about 320 crore in Q3 and further 50 crore in January. With this, the total equity investment made in Exide Energy till date stands at 4,252 crore. Product validation from the cylindrical cell line is ongoing, which is meant for two-wheelers, while installation commissioning is nearing completion in the other lines. Meanwhile, the company continues to engage with various OEMs for two-wheeler, three-wheeler, and four-wheeler, and stationary energy providers across key end markets. With this, I close my opening remarks. I will be happy to take your questions now. Thank you.

Thank you very much. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and 1 on their touchtone telephone. If you wish to remove yourself from the question queue, you may press star and 2. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. The first question is from the line of Siddharth from Numura. Please go ahead.

Yeah, thanks for the opportunity, sir. Sir, first question is on the industrial side of the business. If you can sort of give some more break-up about what percentage of our total revenues will be coming from telecom, solar, and also on the export side, given that some of these segments have faced challenges, And by when do you think we sort of see the weakness bottoming out and probably growth coming back? And second, on the export side also, again, I think you highlighted that we also faced some tariff-linked challenges. Which are these countries where you are sort of facing the challenge and how big they are in our exports?

So, thank you for the question. So, to answer the first question, see, today as we speak, It used to be very high. Once upon a time, telecom used to be alone 10% when, you know, there was a boom of 5G rollout and things like that. But now the technology has shifted to lithium-ion, and therefore the lead-acid volumes have come down as a share of business. So this is the business which is declining because there is a technology shift. Exports at one time, exports right now is about 5 to 6% of the business. It used to be 8% a few quarters back. And this is basically some of the markets we just simply had to, you know, reduce our supplies because of all this geopolitical tension. We know some of our Central Asian markets, we were impacted because of the geopolitics. And we developed certain products, some premium products for the developed market like US and Europe, which didn't pick up because of the barriers. But with the announcements, what we heard yesterday, We know that, yes, our customers, our distributors are ready, our product is ready. We can very soon ramp up those supplies once we see the final details of the new tariff announcements. You wanted to know how much is the industrial part of the business? I must tell you in, I can tell you in quarter three, The industrial UPS business... The call has grown by about 13%, both trade and aftermarket, trade and OEM put together. Solar has grown also single digit, but solar had a negative growth in quarter two, so they have at least come back, I can see. On a nine-month basis, solar is still at 12%. And Motif Power, they are doing extremely well. They have both grown double-digit. So, infra business, if I take telecom away, is still at double-digit growth. And regarding exports, as I said, a few quarters back last year, we developed, homologated, a lot of new premium products for Western market for both Europe and U.S. Which did not, the sales did not pick up immediately because of the uncertainties. But now it has bottomed out, I would like to feel. Because we have also found out new partners and new geographies in the meantime. And actually this tariff-led disruption helped us to find out new countries and new partners, new distributors in other parts. And in Europe we found out a new partner with whom we have an exclusive arrangement which we might make public very soon. And in US also with this announcement of yesterday, I think this is a great boost for us and this makes the team energetic because the products were just waiting to be exported. We'll find out, you know, way to increase the exports. Next year's budget, next fiscal year budgets of exports looks quite robust, particularly because of the low base of this year. And there will be substantial incremental growth.

Got it, sir. To follow up, sir, solar contribution of the revenues also, if you can highlight. And second is on the commodity side. I think last few quarters, we continuously have been seeing a consistent increase in commodity costs, which is why we have been operating at a sort of lower gross margin. So, currently, if you can elaborate a bit more on what percentage of costs are yet to get passed on, and if we have taken any price hike till date in the current quarter, and if you can also highlight for next year what is the margin range you are targeting to achieve given the cost pressure we are seeing in the near term.

Thank you. So solar at this moment is 4-5% of our total revenue. So that's to answer your first question. Secondly, regarding commodities, in last, previous couple of quarters, we have talked about antimony shooting through the roof, and antimony alloy which we largely use in our tubular batteries, they went from some $11,000 to $66,000 a ton. That has softened up in Q3. That has come down to about, let's say, 35,000, 33,000 as we speak. But still, year on year, it is 3x, right? So it is no longer 6x, but 3x. So on a Q on Q, this has come down. But as luck would have it, team has gone up, I am saying sequential quarter. Silver has gone up by 50%, you all know this. And January is even higher than Q3, except for the recent fall, what you saw in a couple of days. Peen has moved plus 12%. Sulfur has moved plus 40%. And copper has moved plus 13%. So these are the essential commodities which we use for our battery manufacturing, for alloys as well as for making sulfuric acid. They got a big hit in Q3. And that has been further weakened by the about 6-7% increase sequentially on rupee versus USD. So, however, the cost savings, they came in very handy. And that's why on a sequential basis, you see an improvement of the gross margin by 175 basis points. We have not taken any price correction in Q3, as I mentioned in my opening remarks, particularly because we wanted to pass on the entire benefit of the GSC reduction to the end customer. So, we had to absorb a bit of it. Some of the increases we offset through the cost savings initiative. But in January, we have taken one round of price correction we had to take because otherwise this currency and these commodities were killing us. So, we took it in January, and we hope to take stage by stage as the situation develops. We'll see what next to do. But yes, to answer your question, we have taken... A price correction in January because of this commodity other than lead, which is so essential for our battery manufacturing.

I hope I have answered all your questions.

Next year's margin, we would not like to give you a guidance, but during the course of conversation, probably you can make out where we stand today in terms of EBITDA margin and what is our profit pool. Possibly we can improve by another 100, 150 basis points next year from where we stand today. That is clearly visible, provided we get some support from LME.

Yes, please. Hello.

Thank you.

Yeah.

The next question is from the line of Vinay Singh from Morgan Stanley. Please go ahead.

Hi, team. Thanks for the opportunity. First question is, you know, like in the presentation, we talk about industrial infrastructure, railway opportunity, data center opportunity. Yeah. So two questions linked to that. One is that are we supplying to any of these segments today? Could we give a percentage of revenue share if so we are doing? Like, even for industrial, you've given us the growth, but we don't get a sense on what is percentage there, if you could comment on that. Second is that, like in telecom, we see that the industry moved away to lithium, and that was, in a way, a disruption to our business. Is there a risk in these segments also that they later move to lithium, so to an extent the opportunity doesn't come to us, or are lithium facilities you are gearing up for supply to these segments also?

Okay, okay. Thank you. So... The industrial business, which is the non-automotive business, comprises to about 30% of the revenue, but between, let's say, 30 to 32. And it used to be 32, maybe two years back. Now, with this telecom declining, this is about 30% of the whole business. Now, as I said in the opening remarks, other than telecom, we see an uptick in the government's spend. We saw it till H1, and we saw it some in Q3 as well. Our B2B, industrial business, generally comes at the late cycle of the CAPEX cycle. So what we are doing right now is basically the end of the previous CAPEX cycle of the infra spend. And therefore, we see a strong uptick in railways, industrial UPS, led by data center, and also on the forklift equipment, the motif power equipment. And, of course, industrial UPS for the OEM, typical OEM business. Now, the drivers are different. Railways, as you know, railways, they have now made a policy that they do not wait till the end of life of a battery for replacement. They have made a strict cadence that once it comes to the main workshop for overhauling, whether irrespective of the life of the battery, they change the battery. It is such a critical equipment for their vehicle, for the train. So, this replacement or overhauling regime has led to increase in tendering activity in railways. Motive power clearly is a driver of industrial investment as well as e-commerce. These new e-commerce and quick commerce businesses are throwing up a lot of third-party warehouses where you need material handling equipment, and therefore we are benefiting out of it. Data centers, you know, I mean, it's written every day in the newspaper. Data center is a key component of increase of industrial UPS business. Is it all lead acid? No. There are segments of data centers where it is served through lithium ion. There will be segments of data centers, particularly in the enterprise data centers, where there will be lead acid. So, it's a mix of both. So, we are getting good orders from those. We have a dedicated... The product in lead asset for data centers, which is called front access. These are high-power batteries, and this can be accessed from the front instead from the top. So, this product is picking up pretty well and well appreciated by our customers. But this data center business has a long gestation period because these are so many approval processes. Normally, it takes anything between three to four quarters. From zero debt to ordered debt, because there are multiple consultants, multiple approval processes which are involved. The only area where possibly we are developing a portfolio in our lithium ion, and later on we can talk about it, is the BESS. BESS largely will be served through lithium ion in India because of its footprint issue, where lithium has a much better case than lithium. And therefore, we are developing a cell format in LSP Prismatic, particularly with this end market in mind. Thank you.

Sir, that is helpful. So for data centers and all, how meaningful are the revenues now? Are they very small? Like you gave them 20% CAGR growth. That I believe is for the industry that you would have given.

Yeah. Data center revenue at this moment, as I said, will be, in a quarter, it will be about, let's say, 75 to 100 crores. But the pipeline is very strong. The number of tenders, the number of RFQs that we have received is pretty strong.

On the lithium side, we earlier talked about one large PV OEM customer and then two-wheeler customer, but what is the progress? When do we actually start to see commercial dispatches from you? Is it this year?

I'll take the first part of the question. We have already told you that two of the four large OEMs we have been working for quite some time. Our designs and the samples got validated. And well accepted by the client. Actually, we delivered more than the specifications in some cases. Now, our two-wheeler, the cylindrical line process validation, our internal validation has already started in Bangalore. And we are now building cells, validating it, and next step we are sending samples to these customers for their own testing. So that process is going on. And the third customer has also, meanwhile, started discussion with us, but so till last quarter there were two, now you can say two and a half or three, and the discussions are pretty positive, and the first line, which will be about one and a half gigawatt, we don't see a challenge in utilizing it once we are through with all the process validations. I'll request Praveen, who's sitting with me, to give some more color on the timelines.

Yeah, so, like mentioned by Avik, so we, in the lines of silent title line, line one, the internal validation samples are made, internal validation is progress, and next step will be to send the samples to customer. What I would like to mention that we have a very close interaction with customer, we have a clear clarity what is expectation of customer, so tests which are to be done is aligned, and we are closely working with them. Similarly, for prismatic line, we are also, line three, one of the lines is almost on the verge of completion of internal acceptance criteria, and we will start next month the sample manufacturing, which will again get internally validated, and then we reach out to our customers. So, I will say considerable progress has happened from last time to this quarter. Line 4 will be our last line, which we are planning to come. We will complete the installation and commissioning by April.

The seismic line, which Praveen just now mentioned, primarily will be used for three-wheelers, as well as, you know, for the e-rickshaw market, where the trend, again, where the trend is shifting from lead acid to lithium, and this is a huge market. We have a, we will use the excite distribution network for that, and the service network, and this will be faster to the market, because this does not require too much of... Validation and homologation by the OEMs. So, therefore, this will be possibly the first revenue stream from the sales side. Yeah.

So, sir, but even the PV OEMs and two-wheeler OEMs, fair to assume that commercial dispatches will be this financial year, or do you think that trickles to next financial year?

I mean, sometimes it depends on the customer also. So, I would not like to say whether it is strictly by 31st of March, but plus minus one month, it should happen. Because the testing protocols and things have been agreed and signed off, it's just a matter of sending samples to them after we complete our internal validation, and then they will do it. So, we are not too much concerned on whether it is March or April, as long as, you know, we are on track for that. It's great, team, thanks, I'll come back in the queue.

Thank you. The next question is from the line of Deephav from JP Morgan. Please go ahead.

Yes, hi. Thanks, sir, for the opportunity. Firstly, on the core business on PediCom now, you know, we've been seeing a degrowth for some time now, for a few quarters at least. So, is it fair to say that, you know, the business is now stabilized or bottomed out and, you know, we can see some growth over there?

So, Vaivav, you know, telecom business was a, once upon a time, though it was not very profitable, but it was a big-time lead-asset business for these base trans-receiver stations, BTS Towers. Now, most of the customers, whether it's Jio or Indas, the tower operators, they have shifted to lithium, and therefore the volume has shifted. Now, we are also present over there. We have supplied the large quantity to, actually, we were the first one to supply to Indas lithium packs. And we still have orders, we still have projections from India for next fiscal year. So that business will be largely a lithium business. This has come down. We are still executing large orders by BSNL and others. But we have a feeling that telecom will soon, telecom tower business will soon shift to lithium-ion as we expected in the past. This was known and this is factored in our business plan. So, right now, telecom has come to only 1% of our revenue in Q3. So, you can say yes, it's largely bottomed out.

Okay, it's just 1% of the business now, so it's bottomed out.

Now, yeah, yeah.

Okay, okay, that's helpful. And on the, just to follow up on this, on the replacement demand, now again, you know, for a lot of quarters now, we've been seeing very strong growth. So, do you expect this to continue or, you know, could there be like a brief phase where replacement demand could be a bit soft?

See, to be fair, this is... You know, we were a little worried till H1 of this year because the automotive OEM business was not picking up. And we were worried that what will happen two years down the line, two or after market. So, but fortunately in H2, the market has grown up, growing strongly, and by January and February projections, we know that this has come back because of the impact of GST. And we grew quarter three. By 25%, which is purely led by the production growth, mostly. So, similarly, out of this quarter 3, December was the highest. It was plus 30. Even if I talk about this month, January, which we just now closed, it's again in that range. So, we would like to believe that since the OEM market has come back, that lull which we were expecting of the market after two years, I think that's largely covered.

Okay. Okay. That's good to know. And second question is on the lithium-ion business. You know, now that you are close to, you know, obviously commissioning and commencing commercial production, any sense on the margins, at least, you know, not with, say, the first 1.5 gigawatt line, but once all the four lines get commissioned, then will we make, like, positive margins or how should we think about it over a period of time? Given that now you're very close to starting commercial production.

I think, Vaibhav, we replied to this question in the last quarter call also. See, what we expect is that the only difference between lead-acid and lithium-ion is that this is largely a B2B business. And unlike lead-acid, where you also have a trade component, of the market component. Now, here with our portfolio, which we are starting, we will have a... Smaller share of trade business, which is the e-rickshaw, as we said, and the two-wheeler business also has some aftermarket potential. Other than that, it's largely OEM driven. Now, though I'm saying OEM, but here the OEM margins are not like, you know, the SLI batteries of lead-acid. Here, this is the engine of the vehicle. So, it will be lesser than the lead-acid trade margins, of course, but it will be higher than the lead-acid OEM business. So, somewhere in between, we expect the margins to come, and we will get a lot of benefit. First of all, commodity is now indexed, and it will be largely passed through, which is de-risking the business. But secondly, when we utilize our lines to the levels where you mentioned, you know, our competitiveness and our efficiencies will actually be the driver for, will be the differentiator. We are hard, you know, we are trying very hard to improve our metal yield already on the yield in the factory. And yield and raw material sourcing, these are the two biggest drivers for competitiveness. On the raw material side, we have been lucky that with our technology partner, we have been able to, you know, access their supply chain. As a result of that, we have signed a large number of master purchase agreements with the suppliers already on a long term basis. So now, and this only comes because... I think we'll be able to deliver a decent positive gross margin, which may not be as high as, you know, 30-40% of the market, where you have more pricing power. But definitely, it will be far better than the OEM margins of lead asset. Yeah.

Great. That's very helpful to know, sir. All the best. Thank you.

Thank you. The next question is from the line of Pramod Amteh from Incrate Capital. Please go ahead.

Yeah, hi. Thanks for the opportunity. Two questions. With regard to lithium, you have taken an enable resolution to further infuse equity into the business. What's the timeline you are looking for that 1,400 crores to be consumed first? Second, also related is there has been a lot of senior-level exits in that business. How does it impact your operations or the medium-term business profile?

So, to the first question, so we have, in the January board meeting, we got an approval from the Excite board for infusing 1,400 crore to Excite Energy for the full fiscal year. That's the approval we got. But how much we invest in which part of the year or which part of the quarter will be decided by the need of capital. So, this will be, I will hand over to Manoj to explain the utilization, and then I will come back to the next question.

Hi, so the idea of this funding basically, as we said earlier also, to ensure that our leverage is lower in ESL. And second, because we are going into a commissioning mode, SOP mode, so this funding is basically a mix of both payout of capex, spending capex, and to manage the working capital requirement. This is what we have kept for the next year for EESL.

So, regarding the senior level exits, first of all, you have to understand this industry is a new industry, and there is a lot of, you know, there will be a lot of poaching and migration of talents, because there is very few talent who are competent enough in this country which are available. So, we are aware of that. This is not only happening with us, because we are also hiring people from other similar adjacent industries at the senior So, Whatever you have heard, something was very planned. It was already planned, and that is why you saw that the day the exit happened, the same day the succession has been announced, which only shows that we have been planning and preparing ourselves. So, this is part of the leadership journey for a new industry. There will be churning happening, and there will be a lot of movement of senior leaders because they are in demand now in the country. We will have exits, we will also have leadership entries, I am sure about it.

And the similar follow-up is it's good to know your products are getting accepted and you are delivering better than the expected performance on the lithium-ion side. Are you now close to, and since you're also talking about gross margins, are you now close to the finalization of pricing? If that is so, how does it compare versus import? Because that's the threat which everybody was looking at. It's very difficult to make money versus the import pricing. Would you give some color in terms of the pricing, negotiation with the customers, how they are looking at it?

So, I told you in the last quarter, I think this question again came up, and I will repeat the answer which I gave. It's a bilateral negotiation. There is no standard formula. Whether it is import parity, whether it is cost plus, it's a mix of both. So, it varies from customer to customer. And this is an ongoing process, I will tell you. Only thing is that we have some temporary, we have to look at it, but we have to see that the imports, we just heard that the imports are getting a little costlier because of withdrawal of certain duties by China. This will have a positive impact on us because at least it will help us to reach import parity faster than we thought.

The percentages you were aware, so I'm not mentioning, so to that extent.

But I would like to believe that for Indian supplier of sales, for the OEM customers, it will not be the price factor only. I strongly believe. Having a local supplier with big capabilities and helping me to receive the material on daily basis or, you know, thrice-a-week basis and then operate it up. 24-hour or 48-hour inventory. This is a great value for any OEMs. We have seen in our other lead-acid OEM business that they operate, they sit in our factory and take every day's quota. So this kind of value cannot be delivered by import because there you have to keep minimum three months to four months of inventory. And when you do that, first is there is a risk of quality because you You can see surprises after two months when you start using that product, number one. Secondly, also the volatility of the valuation of the inventory. Because the lithium prices are fluctuating so much, you may be sitting with a high-cost inventory for three months and suddenly realize that after three months the prices have fallen. So these are the values I would like to believe that our OEMs will still see in a local supply, which can be largely solved by people like us. Yeah, sure.

Thanks and all the best.

Thank you. Before we take the next question, a request to all participants to please restrict their question to two participants. For more questions, please rejoin the queue. The next question is from the line of Raghunandhan from Nuwama Research. Please go ahead.

Thank you, sir, for the opportunity. Firstly, can you indicate how much was the price increases taken in January? We hear from dealers that there was a 2% price hike taken, and post the price hike, is there still any under-recovery?

We have taken a 2% price hike in January. The metals have crashed. We do not know. Nobody knows the impact unless you cross the bridge. So I cannot forecast what will be the percentage recovery going ahead. But in December, we were thinking that we will be able to pass on the whole increase in January, which could not happen, because this is also a function of competitive strategy. So, but we passed on 2%. Hello. But to assess that impact, the metal prices need to stabilize.

Thank you, sir. Can you indicate for investors, you are looking at a positive growth in the upcoming quarter, can you broadly indicate the revenue share of inverters?

Yeah, see, as a share, obviously, by inverters, it's a season time. The season picks up mainly from March and moves to July, unless there is an early summer onset this year, which I cannot predict. I'm from... Almost 3x with respect to off-peak. Excite is always the highest. You know, onset of monsoon, and a very prolonged monsoon, we did not get that benefit so much. But I'm sure this year, this isn't going to be picked up. Normally in a season time, the share of inverter is about 25% of our revenue.

Yes, sir. And on a full-year basis, would it be like 15 to 20 percent, broad range?

Yeah, you are right. About 20 percent, yeah.

And how much would be the current price of imported LSD and NNC cells? There has been increase in the underlying commodity prices recently, and there is also the reduction of the export rebates in China. So broadly, can you indicate how much has the lithium prices gone up in the recent times?

I think this is, this information is available in the public domain, so I cannot give you a specific information for excite. I'm sorry.

Understood, sir. And in the initial lithium capacity, what would be the mix of LSD and NMC for us?

It will be half of, right? Half of, yeah. So, let Ravine answer this. Yes, it will be, thank you. So, it will be 50%. So, out of 60 gigawatt, 50%.

Thank you, sir. Lastly, can you indicate the share of revenue from two-wheeler and four-wheeler, OEM and replacement segments?

Yeah, yeah. The ratio for automotive replacement to OEM is, as we speak, is about between 73% to 75% in trade and 25% to 27% in automotive. So that's how it is. Yeah.

And what would be the share of revenue? Sorry to interrupt, sir.

Can you please rejoin the queue for more questions as there are more participants left in the queue?

Sure, I'll do that. Thank you so much.

Thank you. The next question is from the line of Mumuksh, from Anandrathian Institutional Equities. Please go ahead.

Yeah, sir, congrats on the commencement of recently on the cylindrical line capacity and the new OEM wins. Sir, I just want to understand, Q3, the gross margin expanded 220 bps. Is it mainly due to inventory change and the end-to-money prices coming down? And any other reason for it?

See, antimony prices, though it came down, but this is not an inverter season. Antimony is generally used for the inverter batteries, which is tubular plate. So the volume of takeoff antimony also for us came down. So we will get the real benefit of this in the peak season time, which is just coming up. And in Q2, if you recall our discussion, we took a very conscious effort to cut our production, to cut our inventory and manage working capital. And that is why we generated about 500 crores of additional free cash. So we are more or less at the same level of inventory at Q3 end also. Because Q3, the production went up, and therefore the working capital requirement also went up. Maybe marginally higher.

So that played out on the gross money for this quarter, right, sir?

Yes, yes, yes.

Got it, sir. So on the RM side, if you can help us, what could the RM mix cost for some of the key elements like pin, silver, sulfur, copper, sulfuric acid? If you just broadly help us understand what kind of RM mix they contribute to, sir.

So, I should not be giving you the exact percentages, which is a little technical, but I can tell you, teem, silver, sulfuric acid is required across the whole revenue base, because that's the lead acid battery, right? It's required for all kinds of batteries. So, 100% revenue coverage, you need sulfuric acid. For tin, silver is required mainly for our automotive batteries. Where the growth is higher, But at the same time, the commodity cost is also increasing. Antimony is required for our tubular plate, which is our inverter battery, where the prices are softening, but it's also the off-peak system. So, I think this is the best that I can share with you at this moment.

Got it, sir. Finally, what would be the battery packs, revenue, and anything on the CapEx for this year and next year, sir?

So I will leave these to Praveen to answer, battery packs, which

is 100 crores right now, in the first nine months.

So, right now, we do not plan anything, because pack capacity can be done through your efficient supply chain management also. So, we have one and a half gigawatt hour worth of pack making capacity in Gujarat. So, we will stick to that till we make a further decision.

And just continue on this over, sir. How do you see capex for FY26 and FY27, including the Lipsium and the LED, sir?

So, as I said, 1,400 liquidity we have planned for lithium, 1,400, and we'll have about another 500 roughly for lead-acid core business. That is what we do every year because that's, so we have a plan, strategy, policy to, you know, invest back to the business about same amount equal to our depreciation, which is around that number.

Thank you, sir, for the opportunity. Thank you.

Thank you. The next question is from the line of Sangeeta from Cogito Advisors. Please go ahead.

Hi, can you hear me?

Yes, please.

Hello. Okay. Thank you for the opportunity. Sir, what I wanted to get a sense was that, you know, when we're looking at the impact of raw material prices on our margins, all our competitors would also be facing similar impact. Where does the competitive pressure come from, which really prevents you from passing on these prices fully, or is it just a question of a lag effect in passing them on, and over the period, the entire industry passes it on? That's one question. My second question was that just like RL fluctuations seem to be a key risk to your margins in your lead-acid business, What would be the main risks?

Thank you for the question. To answer to the first part, that, you know, the entire industry will be affected, then why not everybody take a price correction? I am also hunting for the answer for the last many years. Sometimes it happens that somebody follows the other, sometimes it does not happen. Because I think both the self-forces are fighting for the self-spaces on the counters of the distributors or dealers or sub-dealers. So, possibly this has not happened. But if you see the history, Exide has always been the first one to, you know, take the price correction, at least for the last five years that I have been in the industry. And irrespective of whether someone follows or not, we used to pass on the... We never took unless there was a cost pressure. That's clear. So, whenever there was a cost pressure, we were the first one to announce the price increases. You know, the secondary checks reveal that. So what kind of commodity risks you see in lithium-ion? See, lithium-ion, as I mentioned, is largely a B2B business. Like in our automotive OEM, the prices are largely indexed. So our main problem of cost push comes in the trade market in terms of input increase. But generally, lead, at least the prime item which is lead, it is indexed through a formula with our OEMs. So, similar thing will be indexed in lithium-ion also, at least for the main component, main raw material.

Right. So, does that mean that the margins in lithium-ion will be more stable?

Should be. Should be. Should be. And if it is only material driven, then it should be, logically. Unless there is some duty mismatch of country versus country. Some country, we get duty benefit. But as far as the prime index is concerned for material, it should be safe for all.

Right. And so if I can squeeze in one more question, you know, if you look at the different segments of your business, the sense I'm getting is that, you know, a lot of the areas where you feel self-pressure are actually bottoming out. There are tailwinds in many of the segments that you operate in. Now, if we put all of this. What kind of growth numbers should we, top-line growth, should we look at for next year?

I think of the core business, we will fight very hard, but I can see the market will give us opportunities to grow at a very high single digit to early double digit, for sure. Because once I add back, once I add back the declining businesses, that is where we come I mean, because as I mentioned, 92% of our business In this quarter grew by about 12%. So if I can fix the balance 8% to that level, so we should at least come to double digit level.

Thank you. Thank you very much.

Thank you. The next question is from the line of Preet from Ingrade AMT. Please go ahead.

Thank you for the opportunity. I just have one question.

I would like to know the margin differential between OEM and aftermarket business.

No, this is not in public domain, I'm sorry. But you can do your, because, you know, this is stacked margins, in the channel margins also add up. So, you may do your secondary checks, but it's not fair for me to share this.

Sure, sir. No problem. Thank you.

Thank you. The next question is from the line of Sucreep D. Patan from Eastside Fentraite private meter. Please go ahead.

Good afternoon to the team. My first question to Mr. Roy is, first of all, thank you for the detailed commentary. Just want to understand this beyond what was covered in the opening remarks, across Excite's core-led asset business and the newer energy storage initiatives, how does the management decide where to prioritize capacity, capital, and management attention as market conditions evolve? As you track the business, what changes in customer demand, product mix, or competitive intensity typically signal the need to rebalance these particular set of things? I want to understand your view on this.

So, I will give you a broader outline. Excite is in this business for the last 78 years, and it has been a market leader since then. This is not a pomper statement. I just wanted to make a point that we have a very well laid out This is a method of allocating capital. And we have done it in the past and we will continue to do that. And all these 78 years, we have been positive and we generated positive cash flow and we remained debt-free, touch wood, which means we were largely funding our investment through our own accruals. So that has been our strength and that should remain our strength going forward also. Now, how we allocate capital? Of course, in the last three, four years, we decided, though lead acid is a very mature, supposed to be a very mature technology or mature business, we should constantly look for opportunities for capacity expansion for the future, and to bring out new products, and the capex should be around the depreciation amount every year for the core business. So that has been a policy, and we worked on various areas. In some areas we expanded, in some years we expanded the capacity by investing, and in the last two years we were investing heavily on manufacturing technology to achieve cost competitiveness, cost excellence. And if you look at our last disclosures of the last few quarters, you will read more about it. So, last two, three years, we have been focusing more on manufacturing technology. We were putting up new machines to achieve cost competitiveness and quality improvement, which has largely been completed, and now we have taken the phase two for the next few years. The second area of capital allocation is, I think there is a noise somewhere in the background.

Sorry, I'll just mute myself.

Yes, please. So, the first principle was investing in manufacturing technology to gain competitiveness and quality improvement. The second area of our capital allocation is on automation, factory automation mainly. And we have been investing for the last two, three years in a lot of automation in our factories to improve productivity. And third is, of course, investment for tomorrow, which is the lithium-ion project. And therefore, we are very bullish on this project that we have to be future ready. So, with core business reaching its desired competitiveness in terms of capacity as well as automation. Equity infusion to make ourselves future ready for lithium-ion business. That has been the domain of our capital allocation.

Thank you. My second question is to Mr. Agarwal.

Similar question from a monitoring point of view and outlook. Beyond the margins discussed, what are the key internal indicators you track closely, such as raw material passing through, shift between automotive and industrial segments, or working capital trends to assess profitability and cash flow sustainability before these trends show up on the balance sheet? I want to understand your point of view. Thank you.

Thank you for the question. So, see, it's a mix of everything. So, we see the trend of mix also. What is the trend and OEM mix, right? How the entire metal family is going on? As we said, the entire metal family from last two, three quarters is, you know, going into a skyrocket, right? And then we also see how to manage our cash. Now, in quarter two also, we have said the same thing because of the uncertain market because of GST2. The call we have taken is management that will not accumulate inventory, but focus on cash. So in quarter two, the idea was to focus on cash to manage inventory. Then we again ramp up in quarter three with the fact that entire momentum has shifted to the demand side because GST2. And hence we again move to the growth story where we talk about running the factory full capacity, right? Again, having eye on the cash management as well. So if you see our H1 numbers also, the cash management improved a lot. If you compare to March. And then we monitor the entire metal indices to see what is the market capacity to absorb the price increase. And hence, we have taken a first price increase in January also. Right. So this is the levers we see. Apart from that, the huge focus on the cost optimization. So there are a lot of program goals. How can we save money? How can we optimize resources to ensure that we bring benefit into the bottom line through the cost effectiveness. That's what we do.

Thank you and best of luck for the next quarter.

The next question is from the line of Abhishek Kumar from Nefti World. Please go ahead.

Yeah, thanks for the opportunity. Given the move towards high density and high reliability power solutions in hyperscale and edge data, how is XITE evolving technologically to capture this opportunity?

So, as I mentioned, there are multiple tiers of data centers. From a hyperscaler to a coal or to an enterprise. And based on the reliability of power required, the level of redundancy of UPS is decided. And more the redundancy, which means the shorter or tighter the footprint. And the tighter the footprint means higher energy density. And therefore, where lithium-ion plays a better Rolled and laid asset. But there are all, because in that case, in those cases, real estate, it's real money. They save real estate on footprint, on reducing footprint. But there are data centers of various tiers. The footprint or energy density is not an immediate value. It's the reliability of the product and performance, because the redundancy requirement is not as high as, let's say, hyperscaler. And we see there demand coming from lead-acid batteries, and that is where we have our, what we call our EHP series, which is the high-power series, as we call it, and with front axis. So, so far, we are the only one we have it in India, and it's doing reasonably well, I would say. But a lot of RFQs are also pending. So, data center is not only, please don't look at only the metas and googles of this world. There are various, data centers are coming up in various shapes and sizes and various scales.

And is the company looking to have some kind of alliances with data, developers, cloud operators, something like that to capture the opportunity?

So we are in constant touch, but they are generally our customers. And we want to remain a supplier and not get into a partnership mode and expose ourselves more. Because if I go with one, then I have five other customers who might not be happy with that. So we would like to stay as a supplier to all the customers.

Okay, and just last one, the XI, how does the, in terms of competitive risk from global power solution providers, how companies trying to insulate and to defend and grow its revenue share, market share?

You are talking about a core business or lithium-ion?

Lithium-ion in terms of the global power solution OEMs and UPS batteries coming to India.

Frankly speaking, if you look around, we have not seen much of movement of global players setting up cell manufacturing capacity of lithium-ion in India. The people who have taken the maximum steps are all Indian industrial companies. You name us and you know three or four other names. They are all Indians. We have not seen that kind of effort by a global company to come and set up. Maybe they still want to wait and watch, number one. And secondly, Chinese, ultimately, they are so much dependent on China for their competitiveness. Maybe they are not taking any risk. Any global company planning or announcing to set up a...

Because, like, the budget throne is a lot of, like, taxation holidays and all. So, maybe a lot of companies will start contemplating now.

Yeah, but for lithium and battery, I think a lot of industrial, large industrial houses in our country have also committed their investments. So, they will also receive similar kind of support, I'm sure.

Okay. Yeah. Thank you. That's it for the sake of it.

Thank you. I hope that was the last question.

Ladies and gentlemen, that was the last question for today. I now hand over the conference to management for closing comments. Over to you, sir.

So, thank you. Thank you, everybody. It was a very engaging conversation we had. I hope you have been able to answer all your questions satisfactorily. If you have any further questions or if you would like to know more about the company, we would be happy to be of assistance. Thank you very much. Over to the moderator.

Thank you. On behalf of Exide Industries, that concludes this conference. Thank you for joining us and you may not disconnect your lines. Thank you.