Why Amara Raja Share Price is Rising

Earlier this month, we highlighted how certain stocks linked to the Telugu Desam Party (TDP) were experiencing a rally following the election results. Among these, Amara Raja has taken center stage, embarking on a rapid ascent.

India's electric vehicle (EV) sector is poised for significant growth, with the government heavily invested in developing a robust domestic battery industry.

This focus on local battery production has cast a spotlight on companies like Amara Raja Energy & Mobility a leading player in the Indian battery market.

Recently, its share price witnessed a noteworthy rise. It rallied 20% in just one day. While the EV battery sector undoubtedly contributes to investor confidence, a more specific event might have triggered this particular surge.

Let's delve deeper into the recent developments surrounding the company to understand what could be driving this upward trend.

#1 New Strategic Collaboration

Amara Raja Energy and Mobility is making waves in the electric vehicle (EV) battery space. On Monday it announced that its subsidiary, Amara Raja Advanced Cell Technologies, recently signed a key licensing agreement with GIB EnergyX Slovakia, a subsidiary of Gotion High-Tech.

This deal grants its subsidiary access to Gotion's world-class lithium iron phosphate (LFP) technology for lithium-ion cells.

The agreement is a comprehensive one, allowing the company to manufacture top-tier LFP cells in both cylindrical and prismatic formats. It goes beyond just technology access, also encompassing support for building cutting-edge gigafactories that adhere to the latest manufacturing processes.

Additionally, the subsidiary gains integration with Gotion's established global supply chain for critical battery materials, ensuring a reliable source for essential components. Customer technical support is also included, providing valuable assistance in deploying LFP battery solutions.

This technology transfer significantly bolsters Amara Raja's efforts in both battery manufacturing and research & development. The deal complements their existing initiatives, including the advanced research and innovation center e+ Energy Labs.

The partnership aims to leverage continuous improvements in cell performance and production efficiency, ensuring Amara Raja's products remain competitive in the fast-paced EV market.

Unsurprisingly, the news of this strategic partnership triggered a surge in Amara Raja's share price. The company's commitment to innovation and its focus on advanced battery technology resonate with investors.

#2 Further Acquisition in InoBat AS Norway

Earlier this month the company announced that it has significantly increased its investment in InoBat AS, a Norwegian company pioneering custom electric vehicle (EV) battery solutions. It invested an additional EUR 20 million (m), bringing its total ownership stake in InoBat to 9.3%.

InoBat's expertise in developing custom batteries for diverse applications, from passenger cars to commercial vehicles and even aerospace, aligns perfectly with the company's vision for a greener future.

This investment positions Amara Raja to leverage InoBat's expertise and further its ambitions within the rapidly growing EV battery market.

What Next?

The EV battery maker had a good FY24. Its revenues and earnings before interest, tax, and depreciation (EBITDA) saw a healthy increase during the year under review.

Take a look at the financial snapshot of the company in last three years.

Sound financial performance of the company boosts investor confidence. It assures them that the company is not just talking big, the company can actually convert its ambition into profits.

The company aims to further boost these number by various plans. Amara Raja Energy & Mobility is making a significant push towards the future of electric vehicles with its ambitious "Giga Corridor" project planned for Divitipally, Telangana.

The project is backed by a substantial capital expenditure (capex) of 95 billion (bn), further solidified by a memorandum of understanding (MoU) signed with the government of Telangana.

A cutting-edge research and innovation facility, called "E Positive Energy Labs," will be established in Hyderabad, Telangana, to drive advancements in battery technology.

The project has secured a sprawling 262 acres of land in Divitipally, Telangana, providing ample space for the large-scale manufacturing facilities.

A dedicated customer qualification plant will be built to ensure rigorous testing and validation processes.

The giga corridor aims to achieve a staggering 16 GWh (Gigawatt-hour) cell production capacity over the next decade.

Construction has begun on a Pack Giga Plant at Divitipally, Hyderabad. This facility will house a 2-Wh line and dedicated spaces for cell production, customer qualification, and the E Positive Energy Labs. The various components of this Pack Giga Plant are in different stages of construction.

Beyond the giga corridor, Amara Raja is also investing in other key areas:

• Battery Recycling: A state-of-the-art lead-acid battery recycling plant is under construction in Cheyyar, Tamil Nadu. With an expected capacity of 1.5 Lac MTPA (metric tones per annum), this facility is nearing completion and is expected to begin commercial production in Q2/Q3 of FY25.
• Tubular Battery Production: An advanced tubular battery manufacturing plant is being built at ARGC, Chittoor. This plant incorporates improved fire safety measures and is slated for commercial production by Q4 of FY25, with a capacity to produce over 1 m batteries annually.

This multi-pronged approach demonstrates Amara Raja's commitment to comprehensive growth within the battery and electric vehicle ecosystem.

How Amara Raja Share Price has Performed Recently

In the past five days, Amara Raja share price rallied 19%. In the last month, it is up 38.1%.

In 2024, so far its share price has surged 104.5% and its up 161.47% in the last year.

The stock touched its 52-week high of Rs 1,774.9 on 26 June 2024 and a 52-week low of Rs 599 on 26 October 2023.

About Amara Raja

Amara Raja is the second biggest player in the lead-battery space in India.

It enjoys a widespread network, catering to the automotive and industrial segments with its Amaron brand of lead batteries.

The company is positioning itself to benefit from the growing electric vehicle market in the country. Recently, the company has set up a technology hub to develop lithium-ion batteries, at its Tirupati facility in Andhra Pradesh.

To know more about the company, check out its financial factsheet and latest financial results.

You can also check out the detailed comparison piece between Amara Raja Batteries and Exide Industries. This article explains which EV battery manufacturer will lead the market.

To know what's moving the Indian stock markets today, check out the most recent share market updates here.

Disclaimer: This article is for information purposes only. It is not a stock recommendation and should not be treated as such. Learn more about our recommendation services here...