 "This auto ancillary stock has surged 45% in 3 days; up 97% from March low")
Shares of Amara Raja Energy & Mobility (formerly known Amara Raja Batteries) hit a new high of Rs 1,449.55, as they rallied 14 per cent on the BSE in Friday’s intra-day trade backed by heavy volumes on healthy business outlook.
In the past three days, the stock of auto ancillary company has surged 45 per cent from Rs 999.90 touched in Tuesday’s intra-day trade. It has nearly doubled or zoomed 97 per cent from Rs 737.65 hit on March 20, 2024.
At 01:58 pm; Amara Raja Energy & Mobility (ARE&M) was trading higher by 11 per cent at Rs 1,418.05, as compared to 1.8 per cent rise in the S&P BSE Sensex. The average trading volumes at the counter more-than-doubled with a combined 10.04 million equity shares representing 5.5 per cent of total equity of Amara Raja changing hands on the NSE and BSE.
ARE&M encompasses a diverse range of solutions and products, which includes energy storage solutions, Lithium-ion cell manufacturing, wide range of electric vehicle (EV) chargers, Li-ion battery pack assembly, automotive and industrial lubricants, and exploration of new chemistries, among others.
ARE&M 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. Amara Raja’s industrial battery brands comprise of PowerStack, AmaronVolt and Quanta. The company also manufactures India’s leading automotive battery brands Amaron and Powerzone, which are distributed through a large pan-India sales & service retail network.
The company supplies automotive batteries under OE relationships to Ashok Leyland, Ford India, Honda, Hyundai, Mahindra & Mahindra, Maruti Suzuki, and Tata Motors amongst others. Amara Raja’s Industrial and Automotive Batteries are exported to over 50 countries around the world.
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India’s vehicle population is expected to experience exponential growth, with a projected count of approximately 252 million two-wheelers and over 96 million four-wheelers in India by 2028. These projections indicate ample opportunities for battery manufacturers and suppliers. Industry players must stay attuned to these trends and capitalise on the high growth in the automotive battery sector.
The increasing demand for continuous power and the expanding potential of data centres has created a larger need for UPS batteries. Data centres are projected to grow from a 950MW installed capacity to 2000MW by 2025. The company’s batteries have emerged as the preferred choice for many upcoming data centres. Sectors like manufacturing, healthcare, and e-commerce, are expected to experience significant growth in the coming years, thereby driving the demand for UPS batteries.
ARE&M will incur significant capex to become future ready in the Li-ion segment (FCF may take a hit in the medium term). The next leg of valuation re-rating is likely if it is able to tie up with a large firm for technology tie-up in the Li-ion cell space, which could open up the PV Li-ion cell opportunity size of ~45GWh by FY30E, according to analysts at Elara Capital.
The brokerage firm said it continues to monitor new order wins in the lithium-ion space, especially for anchor customers in the 2W space. Auto replacement demand will keep core business revenue and profitability insulated from the cyclicality of the OEM business, it added. The stock, however, is trading above the brokerage firm’s target price of Rs 1,341 per share.
The brokerage firm said it continues to monitor new order wins in the lithium-ion space, especially for anchor customers in the 2W space. Auto replacement demand will keep core business revenue and profitability insulated from the cyclicality of the OEM business, it added. The stock, however, is trading above the brokerage firm’s target price of Rs 1,341 per share.