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All-round beat powered by strong revenue growth Acquires 80-acre land in Karnataka to manufacture Li-ion cell

* Exide (EXID)’s robust 1QFY23 performance was driven by strong revenue growth in both automotive and industrial segments. We expect a sustained recovery led by OEM revival and aftermarket growth, with a continuous shift from the unorganized to the organized segments.

* We maintain our EPS estimates and BUY rating on the stock

Operating leverage partially offsets RM cost pressure

* EXID’s 1QFY23 revenue/EBITDA/Adj. PAT grew 57%/48%/81% YoY to INR39b/INR3.9b/INR2.3b, respectively.

* Of the 57% YoY revenue growth in 1QFY23, price hikes contributed 8- 10%.

* Gross margin contracted 360bp YoY (-10bp QoQ) to 27.9% (est. 31%) due to RM cost inflation in lead and other inputs.

* EBITDA margin too declined 60bp YoY (-30bp QoQ) to 9.9% (est. 10.4%) led by lower gross margin partly offset by operating leverage. EBITDA rose 48% YoY (11% QoQ) to INR3.9b (est. INR3.5b).

* Higher-than-estimated other income and lower interest led to adj. PAT growth of 80.5% YoY (flat QoQ) to ~INR2.3b (est. INR1.9b)

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