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Earnings beat led by strong growth across segments

* Exide’s (EXID) 1QFY27 PAT at INR4.1b came in above our estimate of INR3.2b. Strong double-digit YoY growth was observed across key segments which led to 17.6% YoY growth in revenues, beating our expectations.

* The outlook for the lead-acid business remains positive across the auto and industrial segments (excluding telecom). However, we remain cautious about the long-term returns from the lithium-ion business. Besides, the stock trading at ~29.4x/24.4x FY27E/28E EPS appears fairly valued. Reiterate Neutral with an SoTP-based TP of INR419. We value the core (lead acid) business at 16x FY28E EPS (in line with Amara). We add INR82 per share value for the EV business (based on book) and INR45 per share for its stake in HDFC Life.

Strong growth across segments leads to beat on estimates

* EXID’s 1QFY27 revenue came in above our estimates, growing 17.6% YoY to INR53.0b, with double-digit growth across all major businesses.

* Automotive OEM business delivered 25%+ YoY growth for the third consecutive quarter, continuing to remain one of the fastest-growing businesses for the company.

* 2W/4W replacement business registered its third consecutive quarter of double-digit growth.

* The industrial infrastructure business (excluding Telecom) maintained its low double-digit YoY growth trajectory, supported by demand from infrastructure-linked and industrial applications. ? Inverters and Solar businesses grew by over 20% YoY, supported by strong summer-season demand and strategic initiatives.

* The Exports business returned to growth, recording an over 20% YoY increase, albeit on a low base.

* EBITDA margin came in at 12.4% (higher than the estimated 11.4%), despite headwinds from elevated costs of key raw materials and prolonged disruption arising from the West Asia conflict. Rupee depreciation against USD added further pressure on input costs. The company took calibrated price adjustments to mitigate the impact of higher input costs, while continuing to accrue benefits from cost excellence initiatives and supplychain efficiencies. Absolute EBITDA stood at Rs 6.5b (up 19.5% YoY) and beat our estimates.

* Overall, PAT also came in above estimates at INR4.1b, rising 27.1% YoY.

* The company’s liquidity position remains robust with zero debt and high cash flow generation

Valuation and view

The outlook for the lead-acid business remains positive across the auto and industrial segments (excluding telecom). However, we remain cautious about the long-term returns from the lithium-ion business. Besides, the stock trading at ~29.4x/24.4x FY27E/28E EPS appears fairly valued. Reiterate Neutral with an SoTPbased TP of INR419. We value the core (lead acid) business at 16x FY28E EPS (in line with Amara). We add INR82 per share value for the EV business (based on book) and INR45 per share for its stake in HDFC Life.

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