The shares of the auto component manufacturer fell up to 5 percent after the company reported weak earnings for the September quarter and missed estimates.
With a market capitalization of Rs 24,135.55 crore, the shares of Amara Raja Energy & Mobility Ltd were trading at Rs 1,317.00 per share, increasing around 4.12 percent as compared to the previous closing price of Rs 1,373.90 apiece.
Reason for fall:-
The company shares have seen a bearish movement after Amara Raja Energy & Mobility Ltd announced weak financial performance in which revenue magnified by 12 percent on a yearly basis from Rs 2,811 crore in Q2FY24 to Rs 3,136 crore in Q2FY25, however, on a Quarterly basis revenue zoomed slightly by 0.15 percent from Rs 3,131 crore in Q1FY25 to Rs 3,136 crore in Q2Y25.
Moreover, net profit is magnified by 13 percent on a yearly basis from Rs 214 crore in Q2FY24 to Rs 241 crore in Q2FY25, meanwhile on a quarter-on-quarter basis net profit plummeted by 2 percent from Rs 245 crore in Q1FY25 to Rs 241 crore in Q2FY25.
The EBITDA margin was 14.1% in the reporting quarter, compared to 14.6% in the same time last year. EBITDA is defined as earnings before interest, taxes, depreciation, and amortization.
Brokrage Reccomdation:-
Nuvama, one of the well-known brokerages in India, gave a ‘Buy’ call on the battery stock but cut a target price from Rs 1,980 to Rs 1,580 apiece, indicating a potential upside of 20 percent from Tuesday’s price of Rs 1,317.00 per share.
Brokerage rational:-
According to Nuvama analysts, old-line vehicle and industrial batteries would boost Amara Raja’s core business revenue and EBITDA CAGR to 9% and 10%, respectively, in FY24-27E, which is reasonable for India’s second-largest lead-acid battery maker.
Moreover, the company is doubling down on EVs, with lithium cell plants for NMC/ LFP chemistries slated to come on stream in FY26E/ FY28E and investments in Inobat/Log9 entities. “These efforts improve long-term growth visibility, brokerage said.
As per the brokerage, key risks for the company include a slowdown in domestic OEM and replacement demand, slower industrial growth, heightened competition in lithium batteries affecting ramp-up and margins, rising input costs, and evolving battery technologies requiring fresh investments, potentially lowering returns on existing assets.
Recently, the company has announced an increase in its investment in its wholly-owned subsidiary, Amara Raja Advanced Cell Technologies Private Ltd (ARACT). The board of directors has approved raising the investment limit in ARACT from Rs 1,000 crore to Rs 2,000 crore.
Company Overview:-
Amara Raja Energy & Mobility Limited, formerly known as Amara Raja Batteries Limited, is an Indian storage battery company that produces lead-acid batteries for industrial and automotive uses. The company manufactures car batteries, residential uninterruptible power supplies, and other products.
Written by:- Abhishek Singh
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