Assessing Panasonic Energy’s outlook after 140% share price surge

Lithium-ion batteries are playing a pivotal role in the search for more sustainable and efficient energy solutions, and India is leading the way as we increase our reliance on renewable energy sources. India is leading the way in harnessing the potential of lithium-ion technology.

By 2030, India’s projected cumulative demand for energy storage will reach 903 GWh, covering a variety of technologies including lithium-ion batteries, redox flow batteries, and solid-state batteries.

India urgently needs to strengthen its control over the lithium-ion battery supply chain, as there is a severe lack of infrastructure across the supply chain and limited expertise in deployment. Demand is expected to surge as energy storage systems become pivotal to global decarbonization efforts.

India’s lithium-ion battery market is expected to show remarkable growth, recording a compound annual growth rate (CAGR) of 50% from 20GWh in 2022 to 220GWh in 2030.

Currently, Indian companies are mainly focusing on battery cell manufacturing. Battery manufacturer Panasonic Energy has identified the significant potential offered by India’s lithium-ion battery market.

The company recently launched a joint venture to produce lithium-ion batteries domestically. Additionally, the stock has performed strongly over the past year, with its stock price soaring approximately 140%.

panasonic energy: Is the battery JV set to energizing?

Indian Oil Corporation (IOC) and Japan’s Panasonic Energy Co. Ltd. has formally agreed to outline a joint venture structure aimed at manufacturing cylindrical lithium-ion batteries in India.

This agreement follows the signing of an initial agreement between the two companies in January 2024. The two companies are currently conducting a feasibility study on how battery technology can accelerate India’s clean energy transition. The goal is to finalize the specifics of the partnership by this summer.

The collaboration is expected to drive demand for domestically sourced raw materials, increase domestic value addition, attract new players to the market and boost the growth of the Indian battery industry, especially in advanced cell technologies.

The deeper you research the company, the better you will understand the potential future prospects of this cell manufacturer.

Panasonic Energy Corporate Overview

Established in 1972 under the name of Lakhanpal National Limited. panasonic energy India Co. Ltd. has grown to become one of the largest manufacturers and suppliers of dry cell batteries and lighting products in India.

Headquartered in Vadodara, Gujarat, the company is part of the global Panasonic Corporation, known for producing audio-visual equipment, home appliances, electronic components, automotive electronics and environmental systems.

Panasonic Energy India Co. Ltd. is a prominent supplier of various types of batteries including Zinc Carbon, Alkaline, Lithium and Rechargeable Batteries along with lighting products.

With two manufacturing units, advanced technology, distribution centres, numerous stockists and a strong sales network comprising a wide range of retailers across India, the company has established a strong presence in the market.

Noted for its innovative achievements, the company has pioneered Metal Jacketed Dry batteries, high-performance pencil batteries, zinc chloride technology and eco-friendly batteries in India.

Business divisions of Panasonic Energy

zinc carbon battery

The share of organized manufacturers in zinc carbon batteries is estimated to have remained constant with only minor fluctuations. There was no significant change in the size of the D-size battery market compared to the previous year.

Continuing this trend from FY 2022-23, AA size batteries continue to account for the company’s dominant volume share. Additionally, the growth focus remains on AAA size batteries.

alkaline battery

In India, unlike other regions where the alkaline battery market dominates, the battery industry is mainly dominated by zinc carbon batteries. However, alkaline batteries represent a category that continues to show an upward trend, indicating promising future growth prospects.

Alkaline batteries currently account for about 6-7% of total battery demand in India, but are noticeably more profitable. Recognizing this, the company is actively working to increase sales within this category by targeting new market segments.

During the financial year 2022-23, the company recorded double-digit revenue growth in the consumer channel market. We expect significant business expansion in this segment in the coming years and have already secured a significant number of confirmed supply orders for the financial year 2023-24.

rechargeable battery

Currently, the secondary battery market accounts for about 1% of India’s total battery demand. This segment is dominated by imported low-cost rechargeable batteries. However, the company has succeeded in carving out a niche in the marketing and sales of high quality ‘eneloop’ brand rechargeable batteries and chargers.

Both dealers and consumers recognize and appreciate the superior quality of these rechargeable batteries. Despite challenges posed by the dominance of imported low-cost options, the company has maintained its position and market share in this category.

lithium coin battery

In India, the use of lithium coin batteries is growing significantly in various applications. Panasonic Energy offers the widest range of options in the segment to meet consumer needs, resulting in significant sales growth of approximately 139% over the previous year.

finance Panasonic Energy

In fiscal 2023, Panasonic Energy recorded an increase in revenue reaching ₹253.29 crore, up 5% from ₹241.52 crore in fiscal 2022. After analyzing four years from FY2020 to FY2023, the company has recorded a solid Compound Annual Growth Rate (CAGR) of 20%.

Rising raw material prices and changes in consumer spending behavior impacted the company’s bottom line in fiscal 2023. The company suffered a loss of Rs 10.64 billion in fiscal 2023 compared to a profit of Rs 9.39 billion in fiscal 2022.

Panasonic Energy’s future plans

The business outlook for the industry is very promising and significant growth is expected due to the increasing adoption of battery-powered devices. Government policies that support manufacturing in India, especially in sectors such as toys, electronics, and medical devices, are a pivotal factor driving the rapid market expansion.

Additionally, alkaline batteries are expected to further strengthen their dominance, establishing themselves as the fastest-growing segment in the primary battery market. This growth is mainly due to the increasing demand for primary batteries in various applications.

Over the past decade, India’s per capita purchasing power parity has more than doubled. This, along with the decreasing cost of consumer electronics products and increasing population, has promoted significant growth in the domestic consumer electronics market and consequently developed the battery industry.

Additionally, rising income levels, urbanization, evolving lifestyles, and increased demand for convenience are expected to further increase the demand for battery-powered devices.

The battery industry has a promising future, but it must continue to be able to adapt to changing market trends and environmental regulations to maintain its growth trajectory.

conclusion

With India’s lithium-ion battery market expected to grow rapidly, Panasonic Energy can position itself as a major market player through a joint venture with the Indian Oil Corporation. The company’s strong sales growth, focus on innovation, and diverse product offering bode well for the company’s future prospects.

However, challenges such as rising raw material prices and import competition still remain. What are your thoughts on Panasonic Energy’s potential in India’s fast-growing battery industry? Please share your thoughts on the company’s strategy and future direction.

A work written by Nalin Surya S.

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