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Indian battery maker Exide Industries reported a smaller-than-expected rise in quarterly profit on Wednesday as higher input costs ate into earnings, despite strong demand from the automobile sector.

Net profit after tax rose 7.7% to 2.40 billion rupees ($28.9 million) in the third quarter to Dec. 31, but missed analysts' estimate of 2.62 billion rupees, according to LSEG data.

Raw material costs climbed 11.6%, increasing total expenses by 13%, even though prices of key input lithium carbonate fell. The company did not specify which material costs increased.

As a result, Exide's earnings before interest, taxes, depreciation, and amortisation (EBITDA) margin declined marginally to 11.5% from 11.8% a year earlier.

"Input cost inflationary pressures have started easing, which coupled with our cost optimisation initiatives is expected to support margins," CEO and MD Subir Chakraborty said in a statement.

Demand for batteries increased from the automobile industry as vehicle production rose in the October-December period.

That helped Exide log a 12.6% growth in revenue - the sharpest since the September 2022 quarter - to 38.41 billion rupees.

The automobile industry is key to Exide's earnings, accounting for more than two-thirds of its revenue.

Rival battery maker Amara Raja Energy & Mobility will report its third-quarter results next week.

($1 = 83.1600 Indian rupees)