Amara Raja Energy & Mobility reports a 24% revenue increase in Q1, powered by strong volume growth across segments, with the new energy division soaring over 70%, despite margin challenges and global supply disruptions.
Amara Raja Energy & Mobility said consolidated revenue rose 24% year on year to INR4,215 crore in the June quarter, helped by stronger volumes in both the aftermarket and original equipment manufacturer segments. The company also said its new energy business climbed more than 70% from a year earlier to INR209 crore, with electric-vehicle and telecom packs each growing by more than 50% in volume. Home energy products, including tubular batteries and home UPS systems, advanced by more than 60%, while the tubular plant ran at full capacity. The company said it still held more than 60% of the telecom market, with lithium-ion telecom volumes up about 50%. According to the company, a customer qualification plant with multi-form and multi-chemistry capability was inaugurated in July, and its ePositive Energy Labs research facility is due to start operations this quarter.
The stronger top line was not enough to prevent pressure on profitability. Amara Raja said EBITDA margin fell to 9.6% on a consolidated basis, as higher material costs, brand spending and strategic projects weighed on earnings. In the call, finance chief Y. Delli Babu said the company had taken price increases of about 3% in the quarter but they were not sufficient to offset sharp rises in costs for inputs such as sulphuric acid, polypropylene and alloys. He said another 2% to 3% of price rises were being rolled out. Babu also pointed to higher warranty costs, freight and power expenses, along with spending on brand promotion, the Amaron Assist pilot and manufacturing upgrades under the “Factory of the Future” programme.
The new energy business remains a major strategic focus, but management signalled that it is still early days and margins are lower than in the core battery business. Babu said the company expects initial margins in its battery energy storage system business to resemble those of its current pack operations, with the potential to improve if localisation increases. He put the initial capital outlay for a 10 GWh BESS project at INR250 crore to INR300 crore and said utilisation could reach 5 GWh within about six months of completion, supported by demand from power projects and solar installations. He also said the company may spend INR100 crore to INR150 crore on cell development research this year, while stressing that industrialisation and manufacturing economics would matter as much as the chemistry itself.
Amara Raja also faced mixed conditions in its more mature businesses. Automotive export volumes fell about 20% as shipments to the Middle East were disrupted by longer sea routes, though management expects conditions to normalise in coming quarters. Trading battery sales accounted for about 15% of lead-acid revenue in the quarter, diluting margins, while the recycling operation is still in trial production and has been hit by high local scrap prices. Against that backdrop, the company said Andhra Pradesh’s Pollution Control Board had revoked a 2021 closure order, removing a regulatory overhang that had hung over the business for years. Management said the lead-acid franchise could still deliver 9% to 10% revenue growth in the medium term, driven mainly by volumes.
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