Detailed Narrative
Q4 FY26 Financial Performance Overview
Amara Raja Energy & Mobility reported a consolidated revenue of ₹3,530 crores in Q4 FY26, marking a ~15% growth over the previous year. For the full fiscal year FY26, consolidated revenue reached ₹13,814 crores, a ~7.5% increase YoY. The Lead Acid Battery business contributed approximately 92% of the Q4 revenue, while the New Energy business generated ₹280 crores, growing about 1.5 times YoY. The standalone EBITDA margin for Q4 stood at ~11%, with the Lead Acid Battery business achieving an adjusted operating margin of 12.3%.
Lead Acid Battery Business Dynamics
The Lead Acid Battery business experienced robust growth of ~12% YoY in Q4, primarily driven by domestic automotive volumes. 4-wheeler OEM volumes grew over 30%, and aftermarket volumes (both 4-wheeler and 2-wheeler) increased by 5-6%. Tubular battery volumes saw significant growth of over 35% due to seasonal demand, with 70-75% from in-house manufacturing. However, export volumes were muted due to geopolitical issues and tariff barriers, though customer relationships in regions like the Middle East, Southeast Asia, and Africa were maintained.
New Energy Business Development and Investment
The New Energy business achieved a revenue of ₹280 crores in Q4 FY26 and crossed cumulative installations of 1 gigawatt hour in stationary applications. The company infused an additional ₹100 crores into Amara Raja Advanced Cell Technologies in Q4, bringing the total investment to ₹1,500 crores. The customer qualification plant is expected to commence full-scale operations in the coming months, and a battery energy storage facility (initial 5 GWh, ultimate 10 GWh) is slated for production by the end of the current calendar year.
Cell Manufacturing and Technology Strategy
The first 2 gigawatt hour Giga 1 cell manufacturing line is on track to begin production by June 2027. While the company initially pursued technology licensing through the Gotion partnership, challenges with technology sharing from the Chinese government have led to a focus on self-driven product development by Indian teams. The overall target for New Energy capacity at Divitipally remains at 16 to 20 gigawatt hours, with LFP plant production anticipated sometime in 2028 or later.
Cost Pressures and Pricing Actions
The company faced significant cost pressures in Q4 from rising raw material prices, particularly for alloys, sulfuric acid, and plastics, which saw increases of up to 40%. Rupee depreciation and higher freight costs further contributed to these pressures. To mitigate this, Amara Raja implemented price increases of 5-6% in the domestic automotive business in Q4 and indicated a potential need for further price adjustments of 2-3% in the coming periods, depending on competitive dynamics.
Long-term Outlook and EV Transition
Management expressed confidence in the continued long-term demand for lead acid batteries, especially for auxiliary, home energy, and replacement markets, asserting that multiple vehicle platforms (ICE, hybrid, EV) will coexist. While the New Energy business's mix is currently leaning towards stationary storage, the company aims to be the number one low-voltage solution supplier in India, leveraging its existing investments and adapting to market conditions and technology adoptions.