Can EXIDE benefit from solar segment growth?

Exide Pakistan Ltd. held its analyst briefing recently to discuss the MY24 results and future outlook of the company. The management is optimistic about the solar segment, expecting growth in this area and ensuring the company is well-prepared to capitalize on this opportunity. 

Shifting Gears to Solar

So, what’s driving this optimism? For starters, the management highlighted that the demand in the solar segment is expected to surge, and Exide is all set to meet this anticipated growth. 

The company plans to pivot towards the solar segment, leveraging its existing infrastructure and expertise. With the rising focus on sustainable energy, there is a huge potential for Exide to become a major player in the solar battery market.

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Currently, Exide sources its Lithium-Ion batteries from China as complete built units (CBU). The company has no immediate plans to manufacture these batteries locally, primarily due to their long lifespan of about 10 years, which limits immediate demand. 

However, there’s a glimmer of possibility since the management mentioned setting up a Lithium-Ion battery manufacturing facility that would require a capital expenditure of approximately US$250mn (PKR69.5bn). This is no small feat, given the intricate and challenging nature of the manufacturing process.

The Big Numbers 

The company posted a robust topline of PKR26bn for MY24, up from PKR23bn in MY23—a commendable 10% YoY increase. This growth wasn’t just skin-deep; the gross margins also saw a rise, reaching 19% in MY24 compared to 14% in MY23.

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Notably, auto sales—specifically batteries for vehicles—account for less than 5% of the company’s total sales.

The future margins may face some headwinds due to competitive pressures, with the company steering clear of any unhealthy competition with informal manufacturers.

Earnings also painted a promising picture, with the company reporting PKR1.2bn in MY24, significantly higher than the PKR755mn in the same period last year. With such solid financials, it’s no wonder the management is bullish about the future.

Will the company be able to harness the solar potential and drive significant growth? Only time will tell, but for now, all signs point to a well-prepared journey ahead

⚠️ This post reflects the author’s personal opinion and is for informational purposes only. It does not constitute financial advice. Investing involves risk and should be done independently. Read full disclaimer →