Read More:
Amara Raja Concall February 2025 – Key Insights and Updates
Q3 FY25 Performance Overview
Amara Raja Energy & Mobility Ltd reported a consolidated revenue of ₹3,272 crores for Q3 FY25, marking a 7.5% year-on-year growth. The lead-acid battery segment continues to dominate, contributing 96% of total revenue, showing a 9% growth due to strong demand in automotive and industrial markets.
- Four-wheeler aftermarket saw an 11% growth, while OEM sales remained stable.
- Two-wheeler batteries (both aftermarket and OEM) grew by 16%-17%.
- Industrial battery segment performed well in UPS and export markets, but the telecom battery market declined.
- New energy business faced a 20% revenue decline due to lower demand from OEMs.
Margin Performance
Profit margins were impacted due to rising alloy metal costs (tin and antimony) and higher power tariffs set by the Andhra Pradesh government. These cost hikes led to a 1% to 1.2% decline in operating margins. Additional provisions in Q4 FY25 are expected to further reduce margins by 0.4% to 0.5%.
To counter rising energy costs, the company is focusing on increasing renewable energy usage in the future.
Operational Developments
- The tubular plant is set to restart by the next financial year.
- The battery recycling plant has started its first phase, refining 50,000 tons, with smelting operations expected to begin by Q1 FY26.
New Energy Business Growth
- Two-wheeler battery pack deliveries have begun.
- Localization of portable chargers for two- and three-wheelers is completed.
- The first gigafactory for NMC cells is expected to start operations between late 2026 and early 2027.
Telecom Segment Performance
- Telecom batteries contribute 10%-11% of total revenue but have seen a 25% decline in lead-acid battery sales.
- The sector is gradually transitioning to lithium-ion batteries.
Lithium-Ion Business Outlook
- Revenue from lithium battery packs and chargers was ₹500 crores last year, expected to grow by 10% this year.
- The NMC cell plant is targeting $70 to $75 per kilowatt-hour pricing, with a phased capacity expansion.
Capital Expenditure (Capex) Plans
- ₹400 crores allocated for overall capex this year.
- An additional ₹200-300 crores planned for the new energy division.
- Next year’s capex is estimated at ₹1,000 crores, including:
- ₹300-400 crores for lead-acid battery business
- ₹500-600 crores for new energy initiatives
Market Share and Competitive Standing
- The company expects further gains in the aftermarket sector due to recent sales momentum.
Key Challenges
- Pricing pressure and raw material cost fluctuations remain concerns.
- Potential oversupply in the lithium-ion market could impact profitability.
- The company is carefully managing capital investments to ensure financial stability.
Pricing Strategy
- No recent price hikes have been implemented.
- The company is closely monitoring lead prices and may adjust pricing if necessary.
- Currency depreciation is also being evaluated for its impact on costs.
Future Outlook
Amara Raja remains confident about growth in the lead-acid battery business, especially in the domestic aftermarket and export markets. The new energy business is expected to recover as localization efforts progress and commercial deliveries increase.
FAQs
1. What is the main revenue driver for Amara Raja?
The lead-acid battery segment contributes 96% of total revenue, with strong demand in automotive and industrial sectors.
2. Why did the telecom battery segment decline?
The telecom battery market declined by 25% due to a shift towards lithium-ion batteries.
Read More:
3. What are Amara Raja’s expansion plans?
The company is investing in a new gigafactory for NMC cells, expanding its recycling operations, and increasing renewable energy usage to control costs.
4. What challenges does the company face?
Amara Raja faces raw material price fluctuations, pricing pressure, and lithium-ion market oversupply risks.
5. How is the company managing costs?
The company is monitoring lead prices, increasing renewable energy adoption, and ensuring prudent capital investments.
With these strategies, Amara Raja aims to strengthen its market position and expand its new energy business in the coming years.
Read More at sharepricenews.com
