Amara Raja Energy & Mobility Limited — Q3 FY26 earnings call

Call held 12 Feb 2026

Management summary

Amara Raja delivered a steady quarter characterized by a significant pivot toward New Energy, which now contributes over ₹200 crores to the top line. While the core Lead Acid business faced margin headwinds from rising alloy and acid prices, the company is aggressively expanding its lithium-ion and BESS (Battery Energy Storage Systems) capabilities. Management is navigating a sharp decline in telecom lead acid demand by capturing market share in the lithium transition, while simultaneously addressing export challenges through the planned setup of a U.S. subsidiary.

Highlights

  • Consolidated revenue reached ₹3,410 crores, representing a 4.2% YoY growth.

  • New Energy business crossed a milestone of ₹200 crores in quarterly revenue, growing nearly 2x YoY.

  • Standalone operating margin stood at 11.2%, impacted by raw material costs and OEM product mix.

  • 4-wheeler OEM volumes grew robustly by 25%, while aftermarket volumes saw a modest 3% increase.

  • Exports declined by 15% YoY due to tariff issues in the U.S. and geopolitical uncertainties.

  • Board approved a ₹280 crore capex for a 5 GWh integrated BESS solution plant, expected to be operational by end of FY27.

  • Industrial telecom lead acid volumes declined by over 45% as the sector transitions to lithium-ion.

  • Lead recycling plant contributed 60bps (0.6%) to EBITDA margin accretion during the quarter.

Concerns

  • Raw Material Cost Volatility

  • U.S. Export Tariffs

Key financials

  1. Revenue ₹3,410 Cr +4.2%YoY
  2. Standalone Operating Margin 11.2%
  3. Adjusted Operating Margin 12.3%
  4. Lubes Revenue ₹50 Cr 0%QoQ

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
₹3,374 Cr Total
  • Lead Acid Business ₹3,174 Cr 94.1%
  • New Energy Business ₹200 Cr 5.9%

Guidance & targets

Capex

  • BESS Integrated Solution Plant Outlay Capex · by end of FY27 · High confidence ₹280 crores
    Our Board has approved the setup of 5 gigawatt hour integrated solution plant with an estimated capex outlay of around INR280 crores... We expect this plant to be operational by end of FY '27.

    — Swajitha Rapeti, Head of Corporate Finance

  • Lead Acid Business Full Year Capex Capex · FY26 · High confidence ₹750-800 crores

    Previously ₹700 crores → ₹750-800 crores

    On a full year basis, it can go up to INR750 to INR 800 crores in the financial year.

    — Swajitha Rapeti, Head of Corporate Finance

  • New Energy Side Capex Capex · FY27 · Medium confidence ₹1,000 crores
    Whereas on the New Energy side, we may spend around INR1,000 crores in the next year.

    — Swajitha Rapeti, Head of Corporate Finance

Margin

  • Target Operating Margin Range Margin · Medium Term · Medium confidence 13-14%
    our target is clearly to move back to at least a 13% to 14% range.

    — Delli Babu Y, CFO

Revenue

  • BESS Revenue Potential Revenue · Post-FY27 · Medium confidence ₹2,700-2,800 crores
    INR280 crores should give or take give about INR2,800-INR2,700 crores kind of revenue, assuming the current cell prices.

    — Delli Babu Y, CFO

Risks & concerns

  • Raw Material Cost Volatility

    high

    Lead prices moved back to 1,930 levels; acid and alloy (tin, antimony) prices increased materially during the quarter.

    Management acknowledged

  • U.S. Export Tariffs

    high

    Tariff issues led to a 15% decline in exports; management is considering a U.S. subsidiary to mitigate this.

    Both acknowledged

  • Telecom Lead Acid De-growth

    medium

    Volumes declined >45% as the industry shifts to lithium; management expects lead acid telecom to eventually become irrelevant.

    Both acknowledged

Areas of evasion (1)

  • Specific unit economics for the BESS business were withheld as 'difficult to put' at this stage.

Q&A highlights

2 direct
Margin Compression and Pricing Power Direct
If we target huge margins in the range of, let's say, 16%, 17%, then obviously, you are inviting competition from elsewhere... our target is clearly to move back to at least a 13% to 14% range.

Management clarifies that they are prioritizing market share and competitive positioning over returning to pre-COVID 15%+ margins.

Asked by Joseph George, IIFL

BESS Competitive Advantage Direct
Amara Raja Group is also into EPC business of solar generating stations... it augurs also well for us because we'll be able to participate in many of these private tenders as well and then supply the solutions.

Reveals a key synergy within the group that could help ARE&M secure orders in the nascent BESS market.

Asked by Kapil Singh, Nomura

EPS Growth vs. Sales Growth Partial
The expense increase -- there are expenses that we are incurring towards the lithium-ion business development... we are spending close to INR100 crores on the lithium ion development.

The analyst challenged the company's 10-year EPS growth (8%) being barely above FD rates; management defended this by citing heavy R&D and development costs for the lithium pivot.

Asked by Meet, Professional Capital

2 min read 5 chapters

Detailed narrative

New Energy Pivot Reaches Revenue Milestone

The New Energy business crossed the ₹200 crore revenue mark this quarter, nearly doubling its performance from the previous year. This growth was primarily driven by the supply of 250 MWh of telecom lithium-ion packs, achieving a stationary capacity utilization of over 80%. Management views this as a critical validation of their transition strategy as lead acid volumes in the telecom sector continue to plummet.

BESS Expansion and Asset Turn Potential

ARE&M is aggressively entering the Battery Energy Storage Systems (BESS) market with a Board-approved ₹280 crore investment for a 5 GWh integrated solution plant. Management anticipates an exceptionally high asset turnover ratio of 9x to 10x for this business, projecting revenue potential between ₹2,700 and ₹2,800 crores once operational by the end of FY27. The strategy involves importing cells initially while providing the solution architecture, with plans to localize cell manufacturing as demand scales.

Lead Acid Margins Face Commodity Headwinds

Standalone operating margins were compressed to 11.2%, largely due to material cost increases in tin, antimony, and sulfuric acid. While a 2% price hike was implemented in January 2026 to mitigate these pressures, lead prices remain volatile, recently moving back to the 1,930 level. Management is targeting a return to the 13-14% margin range through operational efficiencies from their new lead recycling plant and better product mix.

Automotive Segment Performance Divergence

The 4-wheeler segment showed robust health with 25% growth in OEM volumes, though aftermarket growth was more muted at 3% due to a high base effect from the previous year. Conversely, the 2-wheeler segment remained flat with only 1% growth, impacted by temporary OEM factory shutdowns and a high base impact of 16-17% growth in the corresponding quarter of the previous year.

Strategic Response to Export Challenges

Exports faced a significant 15% decline, primarily attributed to tariff issues in the U.S. market and rising competitive intensity in the Middle East and Asia Pacific. To counter this, management is working on forming a small U.S. subsidiary to stabilize and improve their footprint in that geography. They remain hopeful that upcoming trade policy reviews will eventually smoothen these headwinds.

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