Skip to content

    Amara Raja Energy & Mobility Limited

    ARE&MGood
    Automobile and Auto Components·30 May 2025
    Management Summary

    Amara Raja reported a steady Q4 FY25 with 5% revenue growth, anchored by robust performance in the automotive lead-acid segment despite a 15% decline in telecom. Margins faced temporary headwinds from commodity costs and regulatory changes in power settlements, prompting a 2% price hike in April. The company is aggressively pivoting toward its New Energy strategy, with significant capex committed to its upcoming gigafactory and lithium cell manufacturing capabilities.

    Highlights

    8

    • Consolidated revenue reached ₹3,060 crores, representing a 5% YoY growth.

    • Lead Acid Battery business revenue stood at ₹2,900 crores, up 4% YoY.

    • New Energy Business revenue grew by 35% YoY, driven by ESS and EV battery supplies.

    • 4-wheeler OEM volumes showed strong growth of 15%, while domestic aftermarket grew 9%.

    • 2-wheeler volumes registered 13% growth across both aftermarket and OEM segments.

    • Operating margins were negatively impacted by 1.5% to 2.0% due to rising antimony alloy prices and power cost adjustments.

    • Total FY25 capex was ₹1,200 crores, with ₹1,000 crores earmarked for New Energy in FY26.

    • The company successfully entered new international markets including the U.K., Greece, and the Benelux region.

    Concerns

    2

    • Rising Antimony Alloy Prices

    • Aggressive Chinese Cell Pricing

    What Changed1

    vs Q1 FY26

    Risks discussed3 → 4 (+1)

    Key financials

    Single quarter

    04 metrics
    1. 01Revenue₹3,060 Cr+5%YoY
    2. 02Lead Acid Revenue₹2,900 Cr+4%YoY
    3. 03Lube Business Revenue₹40 Cr
    4. 04New Energy Revenue Growth35%+35%YoY

    Segment breakdown

    Automotive (4-Wheeler)
    15% OEM Volume Growth9% Aftermarket Volume Growth
    Automotive (2-Wheeler)
    13% Total Volume Growth
    Industrial
    17% Home Inverter Growth15% UPS Growth-15% Telecom Growth
    List

    Guidance & targets

    5
    CategoryTargetPriority
    Margin
    EBITDA Margin Target
    14%
    		Medium
    Capex
    New Energy Business Capex
    ₹1,000 crores
    		High
    Capacity
    Gigafactory Online Timeline
    H1 2027
    		High
    Capacity
    Lead Acid Recycling Capacity
    100,000 metric tons
    		High
    Profitability
    Cell EBITDA per kWh
    $4-$5
    		Medium

    Risks & concerns

    6
    RiskSeverity

    Rising Antimony Alloy Prices

    Material costs for alloys like antimony are negatively impacting operating margins and are expected to persist into Q1. — Management acknowledged

    high

    Aggressive Chinese Cell Pricing

    Aggressive pricing from China ($50-55/kWh for LFP) creates a 'penalty' of 15-20% for domestic manufacturing in the initial years. — Both acknowledged

    high

    Regulatory Changes in Power Settlement

    Changes in transmission regulations for solar power have increased power costs, with settlements currently delayed. — Management acknowledged

    medium

    Export Market Slowdown

    Muted demand in Western geographies and APAC led to a 10% reduction in export volumes during the quarter. — Management acknowledged

    medium

    Areas of Evasion(2)

    • Specific dates for firm customer contracts in the New Energy segment.
    • Exact quantum of further price hikes needed to offset antimony costs.

    Q&A highlights

    3

    “We have taken a price increase in the month of April to mitigate some of these cost numbers... [it was] 2%.”

    Confirms the company is passing on cost pressures to the market to protect margins.

    asked by Kapil Singh, Nomura

    2 min read5 chapters

    Detailed Narrative

    01

    Lead Acid Core Remains Resilient

    The traditional lead-acid business continues to be the primary revenue driver, contributing 95% of total turnover at ₹2,900 crores. Growth was led by the 4-wheeler OEM segment (+15%) and domestic aftermarket (+9%), while 2-wheeler volumes grew by 13%. However, the telecom segment saw a significant degrowth of 15% YoY, which muted the overall industrial volume growth.

    02

    Margin Headwinds from Commodities and Power

    Operating margins were squeezed by approximately 150-200 basis points due to higher costs for antimony alloys and fuel purchase cost adjustments. Additionally, a regulatory change in solar power transmission settlements forced the company to buy more expensive grid power. Management has responded with a 2% price hike in April 2025 to mitigate these pressures.

    03

    New Energy Pivot and Gigafactory Progress

    The New Energy Business grew 35% in Q4, supported by ESS battery supplies to the telecom segment and EV battery performance. The company has invested ₹850 crores in its lithium cell project to date and plans a further ₹1,000 crore capex for FY26. The first gigafactory is on track to begin operations in H1 2027, with an ultimate target capacity of 20 GWh.

    04

    Strategic Expansion into Global Markets

    ARE&M is aggressively expanding its international footprint, recently entering the U.K., Greece, and the Benelux region. While Q4 export volumes were down 10% due to global macro headwinds🌐, full-year export growth remained healthy at 12-13%. The company is also establishing a presence in North America through large retail partnerships.

    05

    Operational Efficiency and Recycling

    The lead-acid recycling plant commenced commercial operations in Q4 with an initial capacity of 50,000 metric tons, aiming to double to 100,000 metric tons. This initiative is expected to improve resource security and long-term margins. Furthermore, digital initiatives and 'Industry 4.0' mechanisms have allowed the company to unlock 6 million units of additional battery capacity without significant new capex.

    This is an AI-generated summary of a publicly available earnings call transcript. It is for informational purposes only and does not constitute investment advice, a recommendation, or an endorsement. inve.money is not a SEBI-registered investment advisor. Please consult a qualified financial advisor before making any investment decisions.