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Amara Raja Ener.
Our verdict on Amara Raja Ener. isn’t the consensus take — see where we landed, and the one risk the bull case glosses over.
See the verdict — free →Does management do what it says?
Management confirmed that initial commercial production at the Tubular Battery Plant commenced in Q1-FY26 (which includes June). (4 met, 1 revised across 5 tracked commitments)
“Commercial production commenced in Q1- FY26, ramping up to full capacity by Q3- FY26”
The New Energy business (Other Business Revenue) has already reached a 7% revenue share in Q3 FY26, exceeding the 5% year-end target early. (2 exceeded, 1 met, 2 revised across 5 tracked commitments)
“Giga cell plant: Capacity of 16 GW by FY30”
See the full cited Management analysis of Amara Raja Ener.
How durable is the business?
Domestic revenue grew by 9.9%, maintaining its dominant share of the total revenue mix at approximately 87.6%. (5 expanding)
“GEOGRAPHICAL REVENUE SPLIT (INR Mn) Domestic FY24 1,02,367 FY25 1,12,501”
The technology moat is being reinforced through the ground-breaking of the first gigafactory and the development of a customer qualification plant. Management expects the gigafactory to come online in the first half of 2027. (1 expanding)
“We broke ground earlier this year on our first gigafactory that should see capacity coming online around in the first half of 2027.”
See the full cited Business Model analysis of Amara Raja Ener.
Where does growth come from?
The Tubular Battery Plant project is on track with commercial production expected to commence in Q1-FY26, slightly ahead of previous estimates. (3 accelerating, 2 new trend across 5 signals, 2 leading indicators)
“1.5 Mn+ Battery/ Annum Advanced Tubular Manufacturing plant... Full capacity available since Q3- FY26”
The company is investing heavily in its advanced lithium battery subsidiary to prepare for the future shift away from traditional lead-acid batteries.
“During Q3, we infused around INR200 crores into Amara Raja Advanced Cell Technologies, which is a lithium subsidiary. And with this, the total investment is now INR1,400 crores.”
See the full cited Future Growth analysis of Amara Raja Ener.
What could break the thesis?
The risk is intensifying as the lead-acid telecom segment saw a 15% year-on-year decline, dragging down the overall industrial volume growth. (5 intensifying, 2 high-severity)
“Lead acid volumes in telecom segment continue to decline as lithium solutions takes over”
The risk is intensifying as ROCE dropped further to 16.2% in FY25 from 19.2% in FY24, reflecting the heavy capital expenditure in the New Energy segment that has yet to generate returns. (4 intensifying, 1 easing, 1 high-severity)
“Forayed into the New Energy business in 2022 with ambitious capex plan of INR 95 Bn for setting up a Giga Corridor in Telangana.”
See the full cited Risk analysis of Amara Raja Ener.
Read the full thesis on Amara Raja Ener.
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