Amara Raja Energy & Mobility Ltd
Q3 FY2025 Stock Research Report
NSE: ARE&M
BSE: 500008
Industry: Energy Storage | EV Batteries | Lead-Acid Batteries
Key Market Metrics
Market Cap
₹19,568 Cr.
Current Price
₹1,069
52-Week Range
₹738 – ₹1,776
P/E Ratio
20.6
Book Value
₹395
Dividend Yield
0.93%
ROCE
18.7%
ROE
14.0%
Q3 FY2025 Financial Performance
Revenue
₹3,272 Cr.
+7.5% YoYEBITDA
₹460 Cr.
+8.2% YoYNet Profit
₹298 Cr.
+11.4% YoYEPS
₹16.3
vs ₹14.6 Q3 FY24Key Takeaways
- Revenue Growth driven by demand for lead-acid batteries in automotive, UPS, and industrial segments
- Margin Expansion through improved efficiency despite raw material price fluctuations
- Strong Order Book from renewable energy storage solutions & data center power backups
- One-time gain: ₹111 Cr. insurance settlement for Chittoor plant fire damage
Growth Strategy & Expansion Plans
Investment in Subsidiaries
- ₹200 Cr. in Amara Raja Circular Solutions (ARCS)
- Expansion of Battery Recycling Plant
- Supports sustainability & cost optimization
- ₹50 Cr. in Amara Raja Power Systems (ARPS)
- Strengthening operational & manufacturing capabilities
Gigafactory & Lithium-Ion Battery Expansion
- Development of “Amara Raja Giga Corridor” (16 GWh capacity by 2030)
- ₹9,500 Cr. investment in Lithium-Ion cell manufacturing
- Indigenous Lithium-Ion battery technology development for EVs & energy storage
- R&D focus on solid-state batteries
Lead-Acid Battery Capacity Expansion
- Strengthening market leadership in automotive, telecom, industrial, and solar applications
- Higher capacity utilization at existing plants
Industry & Competitive Landscape
Industry Outlook
- EV Penetration in India: Expected rise from 1.2% (2023) to 20%+ by 2030
- Stationary Energy Storage Market: 15% CAGR growth projection
- Continued growth in Lead-Acid Battery Market
| Competitor | Focus Areas | Threat Level |
|---|---|---|
| Exide Industries | Lead-Acid, Lithium-Ion, EV Batteries | High (strong R&D, market leader) |
| Luminous (Schneider Electric) | Home & commercial power backup | Medium |
| Tata AutoComp Gotion | EV Batteries, Charging Solutions | High (Tata’s backing) |
| Reliance New Energy (RNEL) | Lithium-ion cell gigafactories | High (huge capital investment) |
Key Risks & Challenges
Raw Material Price Volatility
Lead & lithium prices fluctuate due to global supply chain issues
Competitive Threat in Lithium-Ion Batteries
Aggressive expansion by Reliance, Tata AutoComp, and Exide in Li-ion manufacturing
Slow EV Adoption in India
Despite increasing government incentives, EV penetration remains low
Financial Projections & Valuation
| Metric | FY2025E | FY2026E | FY2027E |
|---|---|---|---|
| Revenue (₹ Cr.) | 12,500 | 14,200 | 16,000 |
| EBITDA Margin | 14.0% | 14.5% | 15.2% |
| Net Profit (₹ Cr.) | 1,000 | 1,200 | 1,450 |
| EPS (₹) | 52 | 63 | 77 |
| ROE | 14.5% | 15.2% | 16.1% |
Valuation Highlights
- Target Price: ₹1,300 (P/E of 22x FY26E EPS)
- Upside Potential: 21.6% from current levels
- Valuation: Moderately Attractive
- Key Metrics: Steady cash flow, strong growth pipeline & 18.7% ROCE
Investment Thesis
✅ Strengths
- Market leader in lead-acid batteries with a dominant market share
- Strong financials with high ROCE & low debt (D/E: 0.04)
- Massive investments in lithium-ion gigafactories & EV battery tech
- Growing demand for energy storage solutions (renewables, UPS, data centers)
⚠️ Risks
- Intense competition from Exide, Reliance, Tata AutoComp in the Li-ion segment
- Dependency on raw material imports (lead & lithium)
- Uncertain government policy shifts in EV subsidies
🟢 Verdict
- Great long-term investment for India’s energy storage & EV revolution
- Short-term catalysts: Lithium-Ion Gigafactory, Battery Recycling, Data Center Power Solutions
- Long-term play: EV Batteries & Renewable Energy Storage Growth 🚀
Final Take
Amara Raja Energy & Mobility Ltd. is a strong long-term play in India’s battery & energy storage market, with robust fundamentals, expansion into lithium-ion, and steady revenue growth. 🚀
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