Summary
Amara Raja Energy & Mobility Limited - Q3 FY26 Earnings Call Summary Thursday, February 12, 2026 4:00 PM IST
Event Participants
Executives 2 Delli Babu Y (CFO), Swajitha Rapeti (Head, Corporate Finance)
Analysts 6 Aniket Madhwani, Joseph George, Kapil Singh, Krupashankar, Meet, Mumuksh Mandlesha, Raghunandhan
Financials & KPIs
| Metric | Reported | Commentary |
|---|---|---|
| Revenue (Consolidated) | ₹3,410 crores | +4.2% YoY; Growth driven by 4-wheeler OEM and New Energy business. |
| Revenue (Lead Acid) | ₹3,174 crores | Muted growth; Impacted by 45% decline in telecom lead acid and 15% drop in exports. |
| Revenue (New Energy) | ₹200+ crores | +100% YoY; First time crossing ₹200cr milestone, driven by lithium telecom packs. |
| EBITDA Margin (Stand-alone) | 11.2% | -110 bps YoY; Impacted by high RM costs (alloys, acid) and OEM mix; adjusted margin is 12.3%. |
| PAT (Consolidated) | ₹151 crores | -35% QoQ (adj.); Impacted by RM headwinds and ₹100cr spend on lithium development. |
| Capex (YTD Dec) | ₹950 crores | ₹600cr allocated to Lead Acid; ₹300cr to New Energy business. |
Geographic & Segment Commentary
- Automotive (Domestic): 4-wheeler OEM volumes grew robustly at 25% YoY, while aftermarket grew a modest 3%. 2-wheeler volumes remained flat due to a high base effect and temporary OEM maintenance shutdowns.
- Industrial & Others: Home inverter (tubular) and HUPS segments grew by 10% YoY. UPS volumes grew 5%, but the overall industrial segment was dragged down by a >45% volume crash in telecom lead acid batteries.
- Exports: Volumes declined by 15% YoY. Management cited tariff issues in the US (Section 232) and increased competitive intensity in the Middle East and Asia Pacific regions.
Company-Specific & Strategic Commentary
- BESS Integration: Board approved a 5 GWh integrated solution plant for Battery Energy Storage Systems (BESS) with a ₹280 crore outlay. Management targets the grid and C&I segments, anticipating a 30 GWh market by FY31.
- New Energy Investment: Total investment in Amara Raja Advanced Cell Technologies (lithium subsidiary) reached ₹1,400 crores after a ₹200 crore infusion this quarter.
- Lead Recycling: The recycling plant contributed 60 bps to EBITDA margins. Battery breaking operations are scheduled to commence in Q4 FY26 to further optimize lead costs.
- Lubes Business: Maintained momentum with a steady quarterly revenue run-rate of ₹50 crores.
Guidance & Outlook
| Metric | Guidance / Outlook | Commentary |
|---|---|---|
| Capex (FY26) | ₹1,700 - ₹1,800 crores | Total spend includes ₹750-800cr for Lead Acid and significant lithium cell plant progress. |
| Capex (FY27) | ~₹1,400 crores | Lead acid capex to normalize to ₹300-400cr; New Energy spend to scale to ₹1,000cr. |
| Revenue (BESS) | ₹2,700 - ₹2,800 crores | Target revenue from the 5 GWh plant once operational by end of FY27, assuming 9-10x asset turns. |
| EBITDA Margin | 13% - 14% | Long-term target; depends on RM cooling and successful pass-through of alloy/acid costs. |
Risks & Constraints
| Risk | Context |
|---|---|
| Raw Material Volatility | Prices of tin, sulfuric acid, and antimony alloys increased materially. While a 2% price hike was taken in Jan '26, further hikes may be needed if acid costs don’t cool. |
| Technology Migration | Rapid transition from lead acid to lithium in telecom is cannibalizing the core industrial business. Lead acid telecom now comprises <5% of revenue. |
| Export Barriers | US tariff issues and geopolitical uncertainties led to a 15% export decline. Management is forming a US subsidiary to mitigate these non-tariff barriers. |
Q&A Highlights
BESS Economics
- Question: What is the competitive advantage and unit economics for the new BESS plant? (Kapil Singh)
- Answer: Asset turns will be high (9-10x) as it is a solution-driven business. While components are initially imported (LFP 314Ah cells), Amara Raja’s EPC experience in solar provides a captive advantage for private tenders (Delli Babu Y).
Margin Headwinds
- Question: Why have margins reached 11% compared to historical 15-16%? (Joseph George)
- Answer: Higher lead price base (₹2.10 lakh vs ₹1.50 lakh previously) makes high percentage margins difficult. Current compression is also due to a ₹100cr investment in lithium R&D/construction hitting the P&L (Delli Babu Y).
Lithium Cell Strategy
- Question: What is the plan for NMC vs LFP chemistry given the shift in 2W/3W? (Kapil Singh)
- Answer: Capacity for NMC is limited to 2 GWh. If local demand shifts entirely to LFP, the lines can be migrated with minimal capital intensity or used for export/power tool markets (Delli Babu Y).
Export Strategy
- Question: Why focus on exports if domestic is 90% of business? (Meet)
- Answer: International markets offer higher margins through AGM battery technology. Domestic growth is steady but capped; global expansion is essential for superior profitability despite current tariff hurdles (Delli Babu Y).
Key Takeaway
Amara Raja reported a mixed quarter characterized by a significant transition in its energy mix, with New Energy revenue doubling to cross ₹200 crores while the legacy telecom lead acid business collapsed by over 45%. Financial performance was pressured by rising raw material costs for sulfuric acid and alloys, leading to a stand-alone EBITDA margin of 11.2%. Strategically, the company is pivoting aggressively toward the Battery Energy Storage Systems (BESS) market with a new 5 GWh plant, aiming to capture 15% market share by FY31. Management remains committed to a heavy capex cycle, projecting ₹1,000 crores for New Energy in FY27. While domestic 4-wheeler OEM growth remains a bright spot at 25%, the company faces immediate challenges in navigating US export tariffs and stabilizing margins through pricing actions and its verticalized lead recycling operations. Success hinges on the timely execution of the Giga-factory and the transition from trading to cell manufacturing to protect long-term ROCE.
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