Amara Raja jumps 7% to nearly 3-yr high; Exide Ind up 5% on heavy volumes

Amara Raja Energy hit a nearly three-year high of Rs 900 with a 7 per cent gain on the back of an over two-fold jump in average trading volumes

Hopes of demand recovery drove shares of battery makers Amara Raja Energy (ARE&M) and Exide Industries up to 7 per cent higher on the BSE in Wednesday’s intra-day trade.

ARE&M hit a nearly three-year high of Rs 900 with a 7 per cent gain on the back of an over two-fold jump in average trading volumes. The stock was trading at its highest level since March 2021. It had hit a record high of Rs 1,128 on August 25, 2015.

ARE&M encompasses a diverse range of solutions and products, which includes energy storage solutions, Lithium-ion cell manufacturing, wide range of EV chargers, Lion battery pack assembly, automotive and industrial lubricants, and exploration of new chemistries, among others.

The company is also one of the largest manufacturers of energy storage products for both industrial and automotive applications in India.

Amara Raja is the preferred supplier to major telecom service providers, telecom equipment manufacturers, the UPS sector (OEM & Replacement), Indian Railways, and the power, oil & gas industry segments.

The company also manufactures India’s leading automotive battery brands Amaron and Powerzone.

Meanwhile, shares of Exide Industries surged 5 per cent to Rs 334.65 with a nearly two-fold jump in its average trading volumes.

A combined 6.3 million equity shares of the company changed hands on the NSE and BSE till 02:26 pm. The stock had hit a record high of Rs 341.80 on January 12, 2024.

Exide designs, manufactures, markets and sells the widest range of lead acid storage batteries from 2.SAh to 20,200Ah capacity to cover the broadest spectrum of applications.

The batteries are manufactured for automotive, power, telecom, infrastructure projects, UPS systems as well as for railways, mining, and defence sectors.

Exide’s management, while announcing their December quarter (Q3FY24) results on January 24, said that in the automotive division, the last few months have seen an uptrend in demand in both OEM and replacement markets.

The uptick is broad-based, with most end-user markets showing signs of demand recovery.

The industrial division is benefiting from large investments which are giving strong impetus to sectors such as BFSI, renewables, telecom, infrastructure (power, railways etc), the management said.

The management is optimistic about the future and said they are witnessing signs of demand pick-up across key verticals.

Input cost inflationary pressures have started easing, which coupled with cost optimisation initiatives is expected to support margins. 

Considering its market leadership, technological alliances, backward integration, favorable product mix and strong balance sheet following the sale of the insurance business, brokerage Motilal Oswal Financial Services finds Exide Industries to be a preferable choice due to its superior risk-reward potential.

However, lithium chemistry poses a risk to the 2W/3W segments (15 per cent of revenue) and the industrial segment (26 per cent of revenue), the brokerage said in the Q3 result update.