Shares of Amara Raja Energy & Mobility jumped over 14% in intraday trade on strong volumes after the company announced progress in its electric vehicle (EV) battery strategy, including plans to begin bulk lithium-ion cell production by 2027.
The stock hit an intraday high of ₹888 before trading slightly lower around ₹881 during the session.
EV pivot and gigafactory plan
The rally followed news that Amara Raja is targeting large-scale EV cell manufacturing, aiming to become one of India’s key domestic producers of lithium-ion cells.
Key highlights of the plan include:
- Entry into EV lithium-ion cell production by 2027
- Gigafactory planned in Telangana
- ~16 GWh cell manufacturing capacity and 5 GWh assembly capacity
- Expansion of energy storage deployment to 2 GWh in the telecom segment
The strategy is backed by a ₹9,500 crore long-term investment in battery R&D and manufacturing.
High-capex, high-risk transition phase
Industry experts note that lithium-ion cell manufacturing is highly capital intensive, with profitability typically requiring 8–10 GWh+ scale.
As a result:
- Early operations are expected to pressure earnings
- Ramp-up costs may continue to impact margins
- Execution speed becomes a key success factor
Financial performance under strain
Recent financial results show mixed trends:
- Revenue rose ~4.2% YoY to ₹3,410 crore
- Profit after tax fell ~53% to ₹140 crore
- EBITDA margins narrowed to ~9.7%
The decline was driven by higher raw material costs and expansion-related expenses.
Rising competition in India’s battery sector
Amara Raja’s EV push intensifies competition with players such as Exide Industries, which is also scaling lithium-ion capacity, along with other emerging energy storage companies.
The sector is supported by strong long-term demand forecasts, though policy execution under the ACC PLI scheme has been slower than expected.
Market takeaway
The sharp stock movement reflects future growth expectations rather than current earnings strength, as investors re-rate Amara Raja based on its EV transition strategy.
However, analysts highlight key risks:
- Heavy capital expenditure cycle
- Execution and scaling challenges
- Near-term earnings pressure
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