At a Glance (50 words)
Amara Raja Energy & Mobility’s lead-acid battery AUM has jumped from ₹6,839 cr in FY20 to ₹12,405 cr in FY25, PAT rose from ₹661 cr to ₹964 cr, working-capital days shrank to 41, and ROCE sits at 17%. Trading at P/E≈20 and P/B≈2.4 across auto and telecom segments, is its spark still bright today?
1️⃣ TL;DR ⚡
- AUM & Profits: Asset base grew 81% in 5 years; PAT +46%
- Margins & Returns: OPM eased from 16%→13%; ROCE steady at 17%
- Balance Sheet: Net-debt near zero; WC days compressed from 62→41
- Dividend & Yield: ₹20/sh payout; 1.0% yield
- Valuation: Trades at P/E 20.2, P/B 2.4 vs peer median P/E ~27, P/B ~1.5
- Fair-Value Range: ₹252–₹328 (P/B model)
- Verdict: ★★★☆ business, ★★★ valuation, ★★★☆ growth spark
2️⃣ Business Snapshot 🏭
| Aspect | Detail |
|---|---|
| Core | Lead-acid batteries (96% of revenues) |
| Segments | Automotive (Amaron, Powerzone), Industrial VRLA (telecom, UPS, railways) |
| Geography | India + exports to 50+ countries |
| Scale | AUM ↑ from ₹6,839 cr (FY20) → ₹12,405 cr (FY25) |
| Clients | Maruti, Tata, Hyundai, Airtel, Indian Railways, Indus Tower |
| Edge | Proprietary battery chemistry, deep OEM ties, backward integration in key inputs |
| New Energy Push | ₹1,200 cr capex in gigafactory; Li-ion JV on the horizon |
Amara Raja’s moat is its Amaron brand recall—“Amaron kya?” is virtually battery-speak for “best in class.”
3️⃣ Five-Year Scorecard 🔋
| Metric / FY | FY20 | FY21 | FY22 | FY23 | FY24 | FY25 | 5-yr CAGR |
|---|---|---|---|---|---|---|---|
| AUM / Sales | 6,839 | 7,150 | 8,696 | 10,390 | 11,260 | 12,405 | 15% |
| OPM % | 16% | 16% | 12% | 14% | 14% | 13% | – |
| PBT (₹ cr) | 873 | 690 | 997 | 1,211 | 1,299 | 1,299 | 9% |
| PAT (₹ cr) | 661 | 511 | 731 | 906 | 964 | 964 | 8% |
| ROCE % | 22% | 16% | 20% | 19% | 19% | 17% | – |
| ROE % | 38% | 29% | 25% | 23% | 23% | 12.5% | – |
| WC Days | 62 | 55 | 52 | 62 | 51 | 41 | – |
| Net Debt | (Net cash) | (Net cash) | (Net cash) | 201 | 153 | 258 | – |
Narrative: AUM nearly doubled; profits climbed in four of five years. Margins dipped on raw-material volatility, but a net-debt-free sheet and working-capital control underpin credit strength.
4️⃣ Meet the KMP 🧑💼
- Mr. A. Srinivasan – Chairman & MD, veteran of ARBL since ’93
- Mr. S. Shivakumar – CEO & Joint MD, driving gigafactory strategy
- Mr. S. Sankaran – CFO, steers treasury, IR, and capital allocation
- Ms. A. Radhika – Company Secretary & Compliance Head
No headline-grabbing celebrity execs—just seasoned leaders who keep the power flowing.
5️⃣ Green Flags 🌱 vs Red Flags 🔴
✅ Green Flags
- Strong Brand Power: Amaron #1 aftermarket battery in India
- Net-Debt Zero: Financial flexibility for capex push
- Working-Capital Efficiency: WC days down to 41 from 62
- Dividend Consistency: ≥15% payout for 5 years
🔴 Red Flags
- Margin Pressure: OPM slipped from 16%→13%
- ROE Compression: 38% → 12.5% (FY25) on equity base reset
- Other Income Variability: ₹204 cr in FY25 vs ₹27 cr in FY23
- Execution Risk: Gigafactory capex ₹1,200 cr could strain near term
6️⃣ Peer Positioning ⚖️
| Company | P/E | P/B | ROCE % | ROE % | WC Days |
|---|---|---|---|---|---|
| Amara Raja Ener. | 20.2 | 2.4 | 17 | 12.5 | 41 |
| Exide Ind. | 17.9 | 2.2 | 19 | 15.4 | 52 |
| Luminous Power | 35 | 4.0 | 14 | 10 | 58 |
| HBL Power | 25 | 1.8 | 12 | 9 | 72 |
| Median Battery Peers | 26 | 2.6 | 15 | 12 | 55 |
Amara Raja trades slightly below peers on P/E and P/B, despite sharper ROCE and cleaner balance sheet.
7️⃣ Fair-Value (FV) Range 🧮
Using the P/B model:Justified P/B=ROE–gr–g\text{Justified P/B} = \frac{\text{ROE} – g}{r – g}Justified P/B=r–gROE–g
- ROE: 12.5%
- r (Cost of Equity): 14%
- g (Growth): Bull 6%, Base 8%, Bear 10%
- BV: ₹403
| Scenario | g | P/B | FV (₹) |
|---|---|---|---|
| Bull | 6% | (12.5–6)/(14–6)=0.8125 | ₹328 |
| Base | 8% | (12.5–8)/(14–8)=0.75 | ₹302 |
| Bear | 10% | (12.5–10)/(14–10)=0.625 | ₹252 |
Fair-Value Range: ₹252 – ₹328
At ₹970, the stock is priced for perfection in gigafactory payoffs and margin rebounds.
🏁 EduInvesting Verdict
“Amara Raja’s lead-acid legacy powers on with strong brand pull and a squeaky-clean balance sheet. But margin fade, a massive capex binge, and a big rerate baked into ₹970 raise the stakes. Only deep conviction in its gigafactory and Li-ion pivot should tempt long bets—otherwise, wait for a shock to spark a pullback.”
Tags: Amara Raja, lead-acid batteries, 5-year recap, gigafactory, fair-value, P/B valuation, EduInvesting
✍️ Written by Prashant | 📅 22 June 2025Tools
