Amara Raja Energy & Mobility Limited — Q4 FY25 earnings call

Call held 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

  • 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

  • Rising Antimony Alloy Prices

  • Aggressive Chinese Cell Pricing

Key financials

  1. Revenue ₹3,060 Cr +5%YoY
  2. Lead Acid Revenue ₹2,900 Cr +4%YoY
  3. Lube Business Revenue ₹40 Cr
  4. New Energy Revenue Growth 35% +35%YoY

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

  • 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

Guidance & targets

Margin

  • EBITDA Margin Target Margin · Medium Term · Medium confidence 14%
    our internal target is definitely to reach our originally stated position of 14% margin.

    — Y. Delli Babu, CFO

Capex

  • New Energy Business Capex Capex · FY26 · High confidence ₹1,000 crores
    Next year, the overall plan for the New Energy Business in terms of capex will be around close to INR1,000 crores

    — Y. Delli Babu, CFO

Capacity

  • Gigafactory Online Timeline Capacity · H1 2027 · High confidence H1 2027
    We broke ground earlier this year on our first gigafactory that should see capacity coming online around in the first half of 2027.

    — Vikramadithya G, Executive Director

  • Lead Acid Recycling Capacity Capacity · FY26 · High confidence 100,000 metric tons

    From 50,000 metric tons today

    We have a starting capacity of about 50,000 metric tons per annum, scaling to 100,000.

    — Harshavardhana G, Executive Director

Profitability

  • Cell EBITDA per kWh Profitability · at 8-10 GWh scale · Medium confidence $4-$5
    if we are able to get $20 to $25 per kilowatt hour, then I'm sure an EBITDA of $4 to $5 is possible. That is something much will depend on the scale efficiency.

    — Y. Delli Babu, CFO

Risks & concerns

  • Rising Antimony Alloy Prices

    high

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

    Management acknowledged

  • Aggressive Chinese Cell Pricing

    high

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

    Both acknowledged

  • Regulatory Changes in Power Settlement

    medium

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

    Management acknowledged

  • Export Market Slowdown

    medium

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

    Management acknowledged

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

2 direct
Margin Levers and Pricing Actions Direct
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

Cell Manufacturing Profitability and Scale Partial
It may still need about 8 to 10 gigawatt hour of capacity for us to achieve those kind of numbers [$4-$5 EBITDA].

Highlights the significant scale required before the New Energy cell business becomes meaningfully profitable.

Asked by Raghunandhan NL, Nuvama Research

Impact of Traded Goods on Margins Direct
Q4 generally is the time where we buy those batteries for the summer season for that inverter business... once we start our manufacturing activity, the amount of trading that we do will come down.

Explains the temporary margin dilution from trading and the expected improvement once the tubular battery plant is fully operational.

Asked by Abhishek Jain, Alfaccurate Advisors

2 min read 5 chapters

Detailed narrative

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.

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.

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.

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.

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.

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