Amara Raja Energy & Mobility Ltd. share price target

Amara Raja’s (ARENM) 3QFY26 PAT at INR1.8b came in well below our estimate of INR2.1b. The earnings miss was due to a slower-than-expected demand and sustained margin pressure.

Amara Raja’s (ARENM) 2QFY26 PAT at INR2.1b came in line with our estimates. Even at the operating level, EBITDA margin was in line with our estimates at 12% (+50bp QoQ).

We met with the management team of Amara Raja to get an update on the business. OE demand has picked up after GST rate cuts, while replacement is yet to pick up, lead costs, excl. currency depreciation, remain stable QoQ.

Focused execution across legacy & new segments About the stock: Amara Raja Energy & Mobility (AREM) is a part of the duopolistic organised Indian lead acid battery market with a strong presence across Automotive (OEM & aftermarket) and Industrial battery space (UPS, Telecom, etc.). Approaching E-Mobility through a mix of EV chargers, Li-On battery pack assembly, captive Li-On cell manufacturing and stake in Log-9 materials Q1FY26 Result: On standalone basis, net sales for the quarter came in at 3,350 crore, up 7% YoY. EBITDA in Q1FY26 came in at 387 crore with EBITDA margins...

Amara Raja’s (ARENM) 1QFY26 PAT at INR1.9b was below our estimate of INR2.1b due to lower-than-expected other income. Margins remained under pressure at 11.5% due to higher non-lead alloy costs and higher power costs.

The company has shown steady growth in its core segments and is actively expanding its capacity and capabilities across areas like recycling, tubular batteries, and New Energy. However, it is currently navigating short-term margin pressures due to rising material and power costs. Timely commissioning of new energy projects and aggressive Chinese cell pricing to be considered as watchlist risks. We believe investment in key projects and...

Belieing our Rs5bn estimate, Amara Raja’s Q2 standalone EBITDA grew 14% y/y to Rs4.4bn due to the lower-than-expected gross margin.

Amara Raja missed bottom-line estimates on weak performance in the telecom and 4W OEM fronts, though EBITDA margin matched estimates.

Amara Raja’s (ARENM) 1QFY25 financials were weak, with EBITDA margin contracting ~90bp QoQ to 13.7% (est. 14.8%).

A technical licence agreement with GIB EnergyX will provide Amara an access to LFP technology.

Adjusted EBITDA margin came in line with estimates, while revenue and EBITDA missed the estimates by 6.7% and 6.2%, respectively.