Exide Industries, a key player in the battery manufacturing sector, is navigating a challenging financial environment as it moves forward with its ambitious lithium-ion cell manufacturing project. Despite a notable dip in operating cash flow for FY25, the company plans to fund the remaining capital expenditures (capex) for Phase I of the venture largely through internal accruals. The dip in cash flow is primarily attributed to rising receivables and inventory levels, while Exide’s growth in key market verticals and ongoing investment in its subsidiary, Exide Energy Solutions Ltd (EESL), signals optimism for the future.
Financial Overview: A Mixed Bag
Exide Industries’ latest financial performance highlights a decline in cash flow from operations in FY25, which dropped to Rs. 1,297.9 crore, compared to Rs. 1,996.5 crore in the previous year. This decrease was mainly driven by an increase in working capital, particularly due to a significant rise in receivables and inventory. Receivables surged to Rs. 314 crore from just Rs. 13 crore in FY24, while inventory levels more than doubled, reaching Rs. 578 crore. The company acknowledges this shift but remains confident that the situation will stabilize within the next 3–6 months.
“The cash flow generation for FY25 met our expectations,” said an Exide official, noting that, apart from the working capital adjustments, the operating cash flow (pre-working capital movement) was better than FY24 by approximately Rs. 55 crore.
Strategic Investments: Paving the Way for Lithium-Ion Cell Manufacturing
Exide Industries is heavily invested in its lithium-ion cell manufacturing venture, a project that represents a significant diversification of its portfolio. The company has already committed Rs. 1,000 crore in FY25 to its subsidiary, Exide Energy Solutions Ltd (EESL), which is driving this initiative. An additional Rs. 300 crore was injected into EESL in April 2025, bringing the total equity investment in the venture to Rs. 3,602.23 crore.
The Phase I of the lithium-ion cell manufacturing project, which is slated for commercialisation in FY26, is expected to require a total capex of Rs. 5,000 crore. Of this, Exide plans to fund around Rs. 1,400 crore through internal accruals, ensuring that the majority of the funding comes from the company’s own cash reserves. The remainder will be sourced through bridge loans by EESL, though Exide does not anticipate the need to take on significant debt in the near term.
“Exide decided to further invest up to Rs. 1,200 crore in EESL’s equity capital, which will be funded entirely through internal generation,” the company spokesperson said, adding that the bridge loans would be used sparingly and only as required.
Operating Margins and Cost Pressures
While Exide has maintained a steady focus on growth, the company faced some headwinds in terms of operating margins, particularly in the January–March quarter of FY25. EBITDA margins moderated due to higher input costs, including a sharp increase in the price of antimony, a key material used in battery manufacturing. Despite these pressures, Exide posted a 4% sequential rise in EBITDA during the quarter.
For the full fiscal year, the company’s EBITDA and profit-before-tax (PBT) margins stood at 11.4% and 8.7%, respectively, a slight dip from the previous year’s figures of 11.7% and 8.8%. Nevertheless, Exide remains optimistic about the future, expecting demand in its key verticals—auto replacement, industrial UPS, and solar— to pick up and support the company’s growth.
Market Outlook: Focus on International Expansion
Despite facing challenges in the OEM and industrial segments, Exide has experienced double-digit growth in its auto replacement, industrial UPS, and solar sectors. Furthermore, the company has expanded its international presence, which has contributed to its growth in these verticals.
As Exide’s lithium-ion cell project continues to progress, the company anticipates a recovery in demand, particularly in the electric vehicle (EV) and renewable energy sectors. The shift towards cleaner energy solutions presents significant growth opportunities for Exide, with the company positioning itself to be a major player in the global battery market in the coming years.
Conclusion: A Strategic Play for the Future
Exide Industries’ decision to rely on internal accruals for the remaining capex of its lithium-ion cell manufacturing venture underscores its commitment to financial prudence. While the company faces challenges related to working capital and rising input costs, its strategic investments, robust growth in select verticals, and expanding international footprint suggest a bright future. With Phase I of its lithium-ion cell project on track for commercialization in FY26, Exide appears poised to capitalize on the growing demand for batteries in the EV and renewable energy markets. The company’s ability to navigate current financial pressures will be crucial as it continues to innovate and adapt to an evolving industry landscape.
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