Stocks of battery makers such as Exide Industries and Amara Raja Batteries have underperformed the market over the past fortnight due to surging cost of key input "� lead "� on the London Metal Exchange (LME). | |
| Lead prices have surged approximately 16.7 per cent during the past fortnight on the international exchange to currently $1,795 per tonne (approximately Rs 79,877 per tonne). |
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| This rise in key input cost resulted in the Exide Industries stock gaining barely 2.6 per cent over the past fortnight compared with 7 per cent gain in the BSE Midcap Index. |
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| During this period, Amara Raja Batteries rose 1 per cent. For battery manufacturers, raw materials as a percentage of net sales typically amounts to 54-55 per cent. |
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| Analysts highlight that while these battery makers have long-term contracts for lead in place, but higher spot prices would also push up long-term contract prices at the time of renewal. Higher lead prices benefit key suppliers such as Hindustan Zinc. |
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| To lessen the impact of higher input costs, battery makers have been focussing on improving productivity coupled with an expansion of their marketing network. |
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| This strategy had helped Exide to grow its operating profit margin by 50 basis points y-o-y to 18.6 per cent in the September quarter. |
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