Amara Raja Energy & Mobility Ltd Q1 FY27 Earnings Analysis

- Lead Acid Battery business expects mid- to high single-digit growth for FY '27. - OEM segments, both 4-wheeler and 2-wheeler, grew over 30% in Q4; aftermarket grew 5-6%. - Industrial segments, excluding telecom, are growing 3-4%; tubular batteries growing above 30%. - New energy (lithium pack) business grew about 1.5x year-over-year. - Telecom lead acid volumes declining due to lithium transition but overall market share remains around 50%. - Lithium pack supply to telecom has crossed 1 gigawatt hour in FY '26. - Expansion underway with new ESS integration facility starting by end of current calendar year (5 GWh capacity initially). - Giga factory under construction targeting long-term capacity addition (aiming for 16 GWh). - Mixed growth with strong OEM growth, emerging ESS opportunities, and steady lead acid demand due to hybrid and ICE vehicle segments coexistence.

- Lead Acid Battery business expects 13-14% EBITDA margins over the next 2-3 years despite cost inflation, driven by throughput improvements and price pass-through. - Mid- to high single-digit growth anticipated in FY '27 for Lead Acid Battery segments including aftermarket and industrial. - New Energy business (Li-ion) showing strong growth with plans to scale cell capacity from 2 to 16 GWh; expected to improve returns as capex efficiencies rise and localization progresses. - Operating margins at Lead Acid Battery level sustained around ~12% despite raw material cost pressures. - Expansion in new energy projects with substantial capex (~INR 1,100-1,200 Cr) expected to drive future revenues but may impact consolidated margins short-term. - Long-term growth supported by diversified product mix (lead acid + lithium) and increasing penetration in ESS and EV markets. - Earnings growth linked to scaling new capacities, market share gains, and cost management initiatives.

- Upcoming capex for the next year is planned between INR 1,500 to INR 1,700 crores. - About INR 400 crores will be spent on the Lead Acid Battery business. - The remaining INR 1,100 to INR 1,200 crores will be invested in New Energy business, including: - Research lab establishment. - Customer Qualification Plant. - Ongoing accelerated project to construct an ESS (Energy Storage System) integration facility in Divitipally: - Initial capacity of 5 GWh, with an ultimate capacity target of 10 GWh. - Production expected to start at the end of the calendar year. - Strategic addition targeted: 16 GWh lithium-ion battery capacity in Telangana. - Capex for gigawatt-hour capacity for cell manufacturing is around $55-$60 million per GWh, with recent reductions of 20-25% noted. - Focus on localization and domestic value addition, including cell and non-cell components. - Investment to support growth in BESS (Battery Energy Storage Systems) and ESS segments.

The transcript does not explicitly mention any current or future plans for fundraising through debt or equity. Key related points include: - Amara Raja Energy and Mobility Limited is undertaking significant capex spending (~INR1,500-1,700 crores for FY27), mainly in New Energy business (~INR1,100-1,200 crores) and Lead Acid Battery business (~INR400 crores). - Focus is on strategic investments in capacity expansion, R&D, and technology development, particularly in lithium cell manufacturing and energy storage. - Discussions focus on operational execution, margin expectations, localization, and growth in new energy and traditional segments. - No direct commentary or indication of planned equity or debt fundraising during the call. Therefore, based on available information on page 16 and related pages, there is no disclosed new fundraising through debt or equity at this time.

The transcript does not explicitly mention the current or expected order book or pending orders in quantified terms. However, the following related points can be noted regarding offtake visibility and customer engagements: - For the 2 GWh cell capacity, customer offtake is based on market assessment and voice of customers, mainly for 2-wheeler EV segments. - At 16 GWh capacity scale-up, offtake is expected from a mix of 4-wheeler OEM programs (some take-or-pay agreements provide downside protection) and the company's own ESS system as an end user. - Customer discussions are ongoing with several passenger vehicle OEMs for future launches, though no firm orders announced yet. - Most OEMs do not plan to localize cells themselves and are engaging with Amara Raja for cell and pack supply. - For ESS, the company expects to be the primary user of cells produced in its planned 5 GWh ESS integration facility.