Amara Raja Energy & Mobility Limited — Q2 FY26 earnings call

Call held 7 Nov 2025

Management summary

Amara Raja Energy & Mobility reported a 6.5% YoY revenue growth to INR 3,467 crores in Q2 FY26, driven by strong OEM demand and over 50% growth in its New Energy business. Operating margins, while improving QoQ, were subdued YoY due to one-time EPR provisions and higher warranty expenses. The company is investing significantly in its lithium subsidiary and expects operational improvements from new plants in upcoming quarters.

Highlights

  • Total consolidated revenue stood at INR 3,467 crores, marking a 6.5% growth over the previous year.

  • Lead acid business registered a revenue of INR 3,297 crores, a growth of around 5% on a Y-o-Y basis.

  • OEM volumes across 4-wheeler and 2-wheeler segments grew about 30% during the quarter on a year-on-year basis.

  • New Energy business delivered healthy quarterly performance with a revenue of around INR 170 crores, a growth of more than 50% compared to the previous year.

  • Lithium telecom volumes registered substantial growth during the quarter on a Y-o-Y basis.

  • UPS volumes have grown by around 5% during the quarter.

  • Antimony prices saw at least about 10% reduction, contributing to gross margin improvement.

Concerns

  • Aftermarket volumes remained stable across product segments on account of procurement delays following the revision in GST rates.

  • International volumes remained flat with no growth compared to the previous year on account of tariff uncertainties.

  • Lead acid industrial volumes degrew during the quarter by around 11% over the previous year, primarily on account of decline in telecom volumes.

  • Operating margins are subdued on a year-on-year basis, primarily due to provisions with respect to higher warranty expense and EPR liability provisions, with a one-time impact of around INR 35 crores.

  • Potential minor delays in procuring lithium-ion equipment due to China restrictions, though alternatives are being explored.

Key financials

  1. Consolidated Revenue ₹3,467 Cr +6.5%YoY
  2. Lead Acid Business Revenue ₹3,297 Cr +5%YoY
  3. New Energy Business Revenue ₹170 Cr +50%YoY
  4. Standalone Operating Margin 12% +0.5%QoQ
  5. Adjusted Operating Margin 12.4%

What they filed

Q1 FY27: revenue up 20.6%, net profit up 4.6% against the same quarter last year.

₹ Cr · quarterly
Line itemQ2 FY25Q3 FY25Q4 FY25Q1 FY26Q2 FY26Q3 FY26Q4 FY26Q1 FY27
Revenue3,136 3,164 2,974 3,350 3,388 +8%3,351 +6%3,460 +16%4,041 +21%
EBITDA441 416 342 387 406 −8%374 −10%377 +10%407 +5%
Net profit241 312 167 194 302 +25%152 −51%322 +93%203 +5%
How to read this

₹ crore, as filed. The percentage beside a figure is the change against the same quarter a year earlier — never the quarter before, which would make every seasonal business look like it collapses and booms each year.

Segment breakdown

Share of Revenue
₹3,467 Cr Total
  • Lead Acid Business ₹3,297 Cr 95.1%
  • New Energy Business ₹170 Cr 4.9%

Capital allocation

high confidence
  • Capex ₹1,400 Cr
    • Consolidated capex for H1 FY26 ₹650 Cr
    • Investment in Amara Raja Advanced Cell Technologies (lithium subsidiary) in Q2 FY26 ₹350 Cr
    • Overall investment in lithium subsidiary to date ₹1,200 Cr
    • Lead acid capex for H1 FY26 (includes tubular battery capex) ₹400 Cr
    • Full year lead acid capex (includes tubular, line expansions, digital initiatives) ₹500 Cr
    • New Energy capex for FY27 ₹1,000 Cr
    • Lead acid maintenance and debottlenecking capex for FY27 ₹350 Cr
    With respect to the capex outlay during the H1 at a consolidated level, we spent around INR650 crores between New Energy business and lead acid business. For the full year, we are expecting a total outlay of INR1,400 crores to INR1,500 crores with a major outlay towards New Energy business during H2. So that's a brief on the Q2 performance. And during Q2, we infused INR350 crores into Amara Raja Advanced Cell Technologies, which is the lithium subsidiary. And with this, the overall investment is now at around INR1,200 crores. Raghu, on the lead acid side, this INR400 crores includes even the tubular battery capex that we have invested. So on a full year basis, lead acid net off the tubular investment, we should be around INR500 crores to INR600 crores because we are investing some money on a couple of line expansions and also some of the factory of the future digital initiatives. Since next year, there will not be much of an additional capex from lead acid point of view, we may fall back to a level of about INR350 crores to INR400 crores of maintenance and other small debottlenecking capex in lead acid and probably we'll need to spend about another INR1,000-odd crores in the next year.
  • Liquidity Cash ₹250 Cr Lithium subsidiary carries cash of around INR250-odd crores.
    In the subsidiary, we have invested so far INR1,200 crores. They still carry a cash of around INR250-odd crores with them.

Guidance & targets

Profitability

  • Standalone Operating Margin Profitability · Run rate basis from here · High confidence 13%
    At the entity level is what we definitely aspire on a run rate basis from here to move to a 13% EBITDA margin.

    — Y. Delli Babu

  • Original EBITDA Margin Profitability · Long term · Medium confidence 14%
    And thereafter in the long term, I think we should again move back to our original EBITDA margin of 14% over a period of time.

    — Y. Delli Babu

New Energy Business Contribution

  • Overall Revenue Share from New Energy New Energy Business Contribution · End of this financial year (FY26) · High confidence 5%
    We expect that we should actually move to a 5% kind of overall revenue share for the New Energy by end of this financial year.

    — Y. Delli Babu

  • Overall Revenue Share from New Energy New Energy Business Contribution · Next year (FY27) · High confidence 7% to 8%
    Maybe next year we have plan to go as what we are thinking right now, to at least move to a 7% to 8% kind of a number.

    — Y. Delli Babu

Lead Acid Battery Revenue Growth

  • Revenue Growth Lead Acid Battery Revenue Growth · Next year (FY27) · High confidence 8% to 10%
    We expect the Lead Acid Battery revenue to grow anywhere between 8% to 10% in the next year as well.

    — Y. Delli Babu

Gigafactory Commercial Production

  • Commencement of Commercial Production Gigafactory Commercial Production · H1 CY27 · High confidence H1 of calendar year '27
    Yes. We have shared saying that we will be doing it sometime in H1 of calendar year '27.

    — Y. Delli Babu

What to watch in Q3 FY26

EPR Credit Cost Impact

Next quarter and subsequent quarters
Current INR 35 crores one-time provision in Q2 FY26
Target Monthly impact not more than INR 1 crore, or zero if collection improves

Why it matters

To verify if the EPR cost becomes a recurring expense or if management's efforts to improve collection mitigate it.

But going forward, the impact on a monthly basis will not be more than INR1 crore depending on the sales volume. So this is not going to be a recurring expenditure.

Risks & concerns

  • EPR Credit Cost

    medium

    INR 35 crores one-time provision for EPR liability due to increased collection obligation (90% vs 70% previously).

    Management acknowledged

  • Subdued Operating Margins

    medium

    Margins subdued YoY despite QoQ improvement, attributed to higher warranty expense and EPR liability provisions.

    Management acknowledged

  • Decline in Lead Acid Industrial Volumes

    medium

    Lead acid industrial volumes degrew ~11% YoY, primarily due to decline in telecom volumes (lithium migration).

    Management acknowledged

  • Competitive Pressure in Lithium Telecom

    medium

    Higher competitive pressure in the lithium pack side for telecom applications due to more players (6-7) compared to lead acid (3).

    Both acknowledged

  • Lead Price Volatility and Higher Procurement Cost

    medium

    Lead prices seen going up, potential for higher procurement costs next quarter, with no immediate pricing action taken.

    Both acknowledged

  • Flat International Volumes

    low

    International volumes remained flat compared to previous year due to tariff uncertainties.

    Management acknowledged

  • Potential Delays from China Restrictions on Lithium-ion Equipment

    low

    China's restrictions on equipment for lithium-ion cell manufacturing could cause minor delays, but alternatives are being explored.

    Management downplayed

Q&A highlights

6 direct
EPR Credit Cost and its sustainability Direct
No, no, Raghu. I think this is a onetime cost that we have factored considering what could be the total liability till date... But going forward, the impact on a monthly basis will not be more than INR1 crore depending on the sales volume.

Clarifies that the INR 35 crores provision is a one-time adjustment for past liability, and future impact is expected to be minimal, potentially zero if collection improves.

Asked by Raghunandhan N. L.

Impact of tubular plant, power cost, and recycling plant on margins Partial
I think tubular manufacturing impact will only be felt in the next season... The power issues also to a major extent, got resolved, except for the electricity duty issue... The scrap recycling battery breaking operations right now, we are expecting that we will commence sometime in the month of January.

Provides timelines for these initiatives to impact profitability, indicating benefits are still some quarters away.

Asked by Raghunandhan N. L.

China restrictions on lithium-ion equipment Direct
While there could be some minor delays because it is not a blanket ban on exporting those machineries, but it is more of getting certain clearances from certain agencies in that country so that they can still export. So that way, while there could be some delays, I don't see a major challenge in terms of not being able to procure a machinery for any of the orders that we have made so far.

Addresses a potential supply chain risk for their New Energy business, indicating manageable delays and alternative sourcing.

Asked by Aditya Jhawar

OEM demand growth and sustainability Direct
I think these are more of -- you know there were certain ramp-up that was done by the OEMs considering their festive season and also the GST rate reductions. That was one of the reasons that has increased the number substantially. But I don't see that this momentum will continue in the coming quarters as well. We'll again fall back to the normal growth rates of all OEMs.

Clarifies that the strong 30% OEM growth in Q2 is likely temporary due to festive season and GST changes, and normal growth rates are expected to resume.

Asked by Kapil Singh

Lead prices and pricing action Direct
As of now, no, Kapil, but we'll -- because again, while we are seeing 2,000 LME, again, we expect that it will again come back. But rupee has been behaving in a little volatile manner. But as of now, we are yet to take any pricing action in the aftermarket.

Indicates no immediate pricing action despite lead price fluctuations, suggesting a wait-and-see approach.

Asked by Kapil Singh

Competition in telecom lithium business Direct
Telecom lithium business has more competition than the lead acid telecom business because in lead acid telecom, we are only 3 players, whereas in the lithium pack side, there are more than 6 to 7 players. So that way, at the pack level, the competitive pressure is definitely higher than what it is on the lead acid side.

Highlights increased competitive intensity in the growing lithium telecom segment compared to their traditional lead acid business.

Asked by Vaishnavi Gurung

Aftermarket segment disruption due to GST transition Direct
No, it is more to do with the stocking patterns of the retailers because nobody wants to have particularly those retailers who are on composition scheme or out of the GST net, they would like to keep the minimum stock because the MRP will be with the 28% GST. And that's the reason there is a tendency at the retailer level to minimize their stock so that they will be burdened.

Explains the specific mechanism of how GST changes impacted aftermarket sales by influencing retailer stocking behavior.

Asked by Joseph George

Overall sales growth strategy and investor wealth creation Partial
So considering the lead acid industry, the way it is growing and in the last 10 years, our revenues have grown on a CAGR of close to 12% to 13%... Our market shares across all products have been continuously improving.

Addresses investor concern about slow growth and wealth creation, emphasizing historical CAGR and market share gains, and highlighting new energy investments for future growth.

Asked by Meet

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Detailed narrative

Q2 FY26 Consolidated Performance Overview

Amara Raja Energy & Mobility reported a consolidated revenue of INR 3,467 crores in Q2 FY26, marking a 6.5% year-on-year growth. The lead acid business contributed approximately 95% of this revenue, while the New Energy business accounted for the remaining. Standalone operating margin stood at around 12%, improving by 0.5% quarter-on-quarter, though it remained subdued year-on-year due to higher warranty expenses and a one-time EPR liability provision of INR 35 crores.

Lead Acid Business Performance

The lead acid business achieved a revenue of INR 3,297 crores, growing 5% YoY. This growth was primarily driven by robust OEM demand in both 4-wheeler and 2-wheeler segments, with OEM volumes increasing by about 30% YoY. However, aftermarket volumes remained stable due to procurement delays and GST rate revisions. Industrial lead acid volumes declined by approximately 11% YoY, mainly due to a shift in telecom towards lithium solutions, while UPS volumes grew by about 5%.

New Energy Business Momentum

The New Energy business demonstrated strong growth, with revenue reaching INR 170 crores, an increase of over 50% YoY. This was supported by increased demand for telecom packs and chargers, with telecom volumes growing substantially, supplying 150 megawatts. The company also commenced supplying 3-wheeler packs with LFP cells during the quarter. The order book for AC and DC chargers has surpassed 5,000 units, and the company aims for the New Energy business to contribute 5% of overall revenue by the end of FY26, and 7-8% by FY27.

Capital Expenditure and Lithium Investment

The company's consolidated capex for H1 FY26 was approximately INR 650 crores, split between New Energy and lead acid businesses. For the full year, the total capex is projected to be between INR 1,400 crores and INR 1,500 crores, with a significant portion allocated to the New Energy segment in H2. An additional INR 350 crores was infused into Amara Raja Advanced Cell Technologies (the lithium subsidiary) in Q2, bringing the total investment to INR 1,200 crores. The subsidiary currently holds about INR 250 crores in cash.

EPR and Warranty Provisions Impact

A one-time provision of INR 35 crores was made for EPR credit costs in Q2 FY26. This provision accounts for the increased obligation to collect 90% of batteries sold three years prior, up from 70%. Management expects the future monthly impact to be less than INR 1 crore, potentially diminishing if scrap collection improves. Additionally, higher warranty expenses contributed to the subdued year-on-year operating margins, stemming from increased overall warranty offerings and actual replacements.

Operational Initiatives and Future Outlook

The tubular manufacturing plant is expected to reach full capacity in Q3 FY26, with volume impact anticipated in Q4, which should aid margins. Power cost issues have largely been resolved, except for an electricity duty issue. The scrap recycling battery breaking operations are slated to commence in January, which is expected to be margin accretive. The company aspires to achieve a 13% EBITDA margin in the near term and eventually return to its original 14% margin in the long term.

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