Exide Industries vs Amara Raja Energy & Mobility

Jan 21, 2024

At present, India majorly imports lithium-ion batteries for electric vehicle (EV) production.

However, the government is encouraging domestic production of these batteries through policies such as Faster Adoption and Manufacturing of (Hybrid &) Electric Vehicles (FAME II) scheme and the Production-Linked Incentives (PLI) scheme.

After announcing these schemes, several foreign companies including Tesla, and VinFast have expressed interest to set up factories in India.

All these factors are aiding the growth of the Indian battery market which is currently valued at US$ 16.8 billion (bn) (Rs 1.3 trillion) and is expected to grow at a compound annual growth rate (CAGR) of 10.5% to reach US$ 27.7 bn (Rs 2.3 tn) by 2028.

To add to this, the government’s focus on electrification of India’s vehicle fleet by 2030, growing need for sustainable and cleaner alternatives to fuel vehicles, India’s robust supply chain and thriving battery manufacturing industry makes the country a potential preferred supplier for global companies.

While several battery manufacturers will benefit from this growth, two major players, Exide Industries and Amara Raja Energy & Mobility, stand to gain the most.

In this article, we have compared these two companies on various parameters to find out which is a better company.

Business Overview

# Exide Industries

Exide Industries is a leading manufacturer of storage batteries in India. It supplies its products to automotive, power, solar, telecom, and submarine companies.

The company has ten manufacturing plants with a production capacity of 54 million (m) units of automotive power and 5.8 billion (bn) ampere-hour (ah) of industrial power.

It has a pan India presence with a wide distribution network with over 150 warehouses and sales offices, 95,000 direct and indirect dealers, and over 1600 Exide care outlets. It also exports to over 60 countries.

The company’s clients include Tata, Maruti, Nissan, Hero MotoCorp, Ericsson, Cipla, BHEL, and BSNL.

# Amara Raja Energy & Mobility

The flagship company of the Amara Raja group, Amara Raja Energy & Mobility, is one of the largest manufacturers of lead-acid batteries.

It sells its leading brands, such as Amaron, PowerZone, Amaron Quanta, and Amaron Volt, for automotive and industrial uses.

The company has seven manufacturing plants with a capacity to produce 19 m 4-wheeler batteries, 30 m 2-wheeler batteries, and 2.3 bn ah of industrial batteries.

It has a strong distribution network of 23 branches, 39 distribution points, 500+ Amaron franchisees, 100,000+ points of sale, 1,000+ power zone retail stores and 2000+ extensive service hubs in India. It also exports to over 50 countries.

Some of its customers include Ashok Leyland, Ford, Honda, Hyundai, and Mahindra and Mahindra.

Between the two, Exide Industries has a larger market cap of Rs 271.7 bn as compared to Amara Raja Batteries, which has a market cap of Rs 136.4 bn.

Moreover, Exide Industries also has a larger market share of 50% in the domestic battery market compared to Amara Raja Batteries, which has a market share of 35%.

Exide Industries also has a dominant market share in the replacement battery space.

A higher market share of Exide Industries is primarily due to its dominant presence in the battery industry and higher manufacturing capacity.

If we compare the performance of both companies on the stock market over the last year, both have outperformed the benchmark Nifty 50 index.

However, Exide Industries outperformed by giving a 71.4% return as opposed to the 41.4% return by Amara Raja.

# Revenue

In terms of revenue, Amara Raja outpaced its competitor.

In the last five years, its net sales have grown at a compound annual growth rate (CAGR) of 8.9%, whereas Exide Industries’ net sales grew at a CAGR of 0.5%.

Revenue

Diversified revenue streams and established relationships with its clients have helped the company almost double its revenue in the last five years.

To add to this, its wide distribution reach has also helped Amara Raja to grow its revenue.

Exide Industries, on the other hand, witnessed muted growth. Its revenue fell drastically…