Shares of Amara Raja Energy & Mobility Ltd. fell nearly 5% on November 5 after the company reported disappointing earnings for the quarter ending September 30, 2024, missing market estimates.
The company’s net profit increased by 6.3% year-on-year (YoY) to ₹240.7 crore in Q2FY25, while revenue from operations rose by 11.6% YoY to ₹3,135.8 crore during the same period. At the operational level, Amara Raja’s EBITDA grew by 7.5% YoY to ₹440.7 crore.
The EBITDA margin was recorded at 14.1% for the reporting quarter, down from 14.6% in the same period last fiscal year. EBITDA stands for earnings before interest, tax, depreciation, and amortization.
Key Risks for Amara Raja:
- A slowdown in domestic Original Equipment Manufacturer (OEM) and replacement demand could reduce revenue forecasts.
- Slower growth in industrial demand might also affect revenue expectations.
- Increased competition in the lithium battery sector may delay production increases and pressure profit margins.
- A sharp rise in input costs could impact profitability.
- Changes in battery technologies may require new investments and yield low internal rates of return (IRR) on existing investments.
Amara Raja also said that it has decided to increase the investment commitment in its wholly-owned subsidiary, Amara Raja Advanced Cell Technologies Private Ltd, from ₹1,000 crore to ₹2,000 crore. The board has approved increasing the investment limit in ARACT to ₹2,000 crore. This capital shall be provided at one or more stages through loans, equity, or any other financing option.
Amara Raja shares were quoted almost 4% lower at ₹1,321.50 by 11:05 am, exchanging hands on the National Stock Exchange. This year, the stock has gained about 60% whereas Nifty has 10% returns.
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Source: Moneycontrol
News Desk
