Exide Industries Navigates Q2 Headwinds with Strategic Focus on Green Tech and Operational Excellence

Exide Industries Limited, a venerable name in India's battery sector, reported its standalone financial performance for the second quarter of fiscal year 2026 (Q2 FY26), revealing a period marked by both challenges and significant strategic advancements. While the company experienced a slight dip in revenue and profitability, management articulated a clear path forward, emphasizing its ambitious foray into lithium-ion manufacturing and leveraging growth opportunities in the solar segment.

For Q2 FY26, Exide Industries recorded a standalone revenue of INR 4,178 crore, a modest 2% decline compared to INR 4,267 crore in Q2 FY25. This translated into an EBITDA of INR 395 crore, down 18% from INR 484 crore in the previous year, with the EBITDA margin contracting to 9.4% from 11.3%. Profit After Tax (PAT) also saw a 26% reduction, settling at INR 221 crore against INR 298 crore in Q2 FY25. For the first half of FY26 (H1 FY26), revenue grew by 1% to INR 8,688 crore, while EBITDA and PAT declined by 4% and 6% respectively. These figures reflect the immediate impact of market dynamics and strategic decisions made during the quarter.

Financial Performance Snapshot (Standalone)

Navigating Market Shifts and Strategic Imperatives

The Q2 performance was significantly influenced by the government's GST rate reduction announcement on August 15, 2025. This led to a temporary destocking by distributors and retailers who anticipated new inventory with updated prices. In response, Exide proactively implemented production cuts in August and September to manage inventory and optimize cash flow. Despite these measures, the company's operating profitability faced pressure from continuous increases in input material costs, which were not fully passed on to the market, as the company prioritized passing on the GST benefits to consumers.

Management highlighted that while 88% of the business segments, including aftermarket automotive, solar, and Industrial UPS (IUPS), contributed to growth, the remaining 12% experienced a decline. This decline was primarily observed in exports, the e-rickshaw business, and the telecom segment, impacted by weaker demand and tariff uncertainties. The solar and home UPS businesses, which constitute approximately one-third of the company's operations, were particularly affected by an extended monsoon season and the GST rate cut announcement. However, the company anticipates a strong rebound in Q3 for these segments, buoyed by pent-up demand and the favorable GST changes.

The Lithium-ion Leap and Solar Ambitions

A cornerstone of Exide's future strategy is its ambitious lithium-ion cell manufacturing project under Exide Energy Solutions Limited (EESL). The project is nearing 100% utility readiness across its cylindrical and prismatic lines, with product validation trials for Line 1 expected to commence in Q3 FY26. Production is slated to begin towards the end of FY26. Exide has already invested INR 3,947 crore in this 100% subsidiary and is actively engaging with various OEMs across 2, 3, and 4-wheeler segments, as well as stationary energy providers. The company aims for margins in this new vertical to be comparable to its current lead-acid business once optimal utilization is achieved.

In the solar segment, Exide is strategically positioned to capitalize on India's renewable energy push. The company aims to leverage government initiatives like the 'PM Surya Ghar' scheme and the MNRE's roof-top solar target of 40 GW by 2026. The recent GST reduction on solar combo packs from 12% to 5% is expected to further boost demand. Exide projects its solar business to cross INR 1,000 crore this year and reach INR 1,500 crore within the next 2-3 years, driven by its dedicated vertical and extensive distribution network.

Operational Excellence and Digital Transformation

Exide's strategic framework for sustained profitable growth is built on four pillars: Revenue Growth, Customer Centricity, Digitization, and Process Automation. The company is investing in operational efficiencies, including transitioning a significant portion of its 2-wheeler battery production to Punched Grid Technology and implementing continuous casting for 4-wheeler batteries. These initiatives are expected to improve material and labor costs, enhance quality, and reduce warranty returns.

Digitization efforts are aimed at empowering the ecosystem, including channel partners, influencers, and the sales team. The company has developed dedicated apps, optimized its Google Search Page for Dealers, and launched the 'Batmobile' platform for rapid doorstep car battery service. These digital tools are designed to enhance customer experience, increase market reach, and streamline operations. Furthermore, Exide is strengthening its OEM relationships, securing 100% auxiliary battery share for new models like the Maruti E-Vitara and the re-launched TATA Sierra.

Outlook and Investor Confidence

Despite the Q2 headwinds, Exide's management expressed confidence in a strong rebound in Q3 FY26, driven by pent-up demand and the positive impact of GST reductions. The outlook for the lead-acid business remains positive, with an anticipated uptick in auto OEM demand. The company maintains a strong, debt-free balance sheet and continues to fund new projects through internal accruals, demonstrating disciplined capital allocation. Exide's commitment to green technology, operational excellence, and customer-centricity positions it favorably to capitalize on India's evolving energy landscape and maintain its leadership in the battery industry.