1. Opening Hook
When you think of “energy transition,” you imagine EVs zooming and lithium packs roaring. Amara Raja, though, quietly keeps the lights on—literally—with old-school lead-acid batteries still doing 95% of the work. While the rest of the world debates solid-state tech, AR’s CFO spent the call explaining a ₹35 crore “EPR provision” that sounds more like a government pop quiz than a growth lever. Still, lithium’s catching sparks, OEMs are surging, and margins—well, they’re somewhere between cautious optimism and cautious accounting.
Keep reading—because the next few quarters could decide if AR is India’s next giga factory story or just another case of “too much lead, too little lithium.” 🔋
2. At a Glance
- Revenue up 6.5%– CFO swears it’s real, not a GST mirage.
- OEM volumes +30%– Apparently, festive demand now counts as “structural growth.”
- Operating margin 12%– Adjusted for everything under the sun, make that 13.4%.
- EPR Provision ₹35 crore– Because recycling is expensive when the planet cares.
- Capex ₹650 crore H1– Of which most went to “future-proofing.” Investors pray it works.
- Lithium biz ₹170 crore– The toddler business that’s already sprinting 50% YoY.
3. Management’s Key Commentary
“Lead acid business contributed 95% of revenues; New Energy did ₹170 crore this quarter.”(Translation: Lithium’s still a side hustle, but we’ll keep name-dropping it.)😏
“Margins improved QoQ but subdued YoY due to warranty and EPR provisions.”(Translation: We blame compliance, not competence.)
“We’ve infused ₹350 crore more into Amara Raja Advanced Cell Technologies.”(Translation: Lithium’s eating cash faster than it’s making it.)
“This ₹35 crore EPR hit is a one-time thing… probably.”(Translation: Depends on how well we recycle our own excuses.)
“OEM demand up 30%, aftermarket stable, exports flat.”(Translation: Domestic cars love us; foreign ones ghosted us.)
“Gigafactory to start in H1 2027.”(Translation: The dream’s alive, just a couple
of fiscal years away… again.)
“We’ll hit 13% EBITDA soon, 14% eventually.”(Translation: Patience, dear shareholders—margins grow slower than batteries charge.)
4. Numbers Decoded
| Metric | Q2 FY26 | YoY Growth | Remark |
|---|---|---|---|
| Revenue | ₹3,467 Cr | +6.5% | OEM demand lit the spark |
| Lead Acid Biz | ₹3,297 Cr | +5% | Still 95% of the company |
| New Energy | ₹170 Cr | +50% | Small but zippy |
| Operating Margin | 12% | – | Adjusted = 13.4% (after EPR & lithium costs) |
| EPR Provision | ₹35 Cr | — | Planet tax, basically |
| Capex (H1) | ₹650 Cr | — | ₹350 Cr into lithium arm |
| FY26E Capex | ₹1,400–1,500 Cr | — | H2 heavy, new energy focus |
| Gigafactory Launch | H1 2027 | — | Fingers crossed 🤞 |
(Company’s balance sheet looks heavy, but lithium optimism keeps investors caffeinated.)
5. Analyst Questions
Q:Will EPR provisions keep hurting margins?A:Nope, one-time only. (Until the next regulation appears.)
Q:How’s the tubular plant doing?A:Just started. Expect magic next quarter. (And depreciation this one.)
Q:Lithium gear from China—any issues?A:No ban, just “paperwork.” (Translation: bureaucratic suspense.)
Q:Why 30% OEM growth?A:Festive rush and GST quirks. (So, not repeatable.)
Q:Margins goal?A:13%
