Amara Raja Batteries shares jump 12% on strong Q2

Shares of Amara Raja Batteries rallied nearly 12% in early trade on the Bombay Stock Exchange (BSE) on Friday after the lead-acid battery manufacturer reported strong earnings in the second quarter of the current fiscal, driven by robust demand in the automotive sector. The company, which manufactures automotive batteries and home UPS batteries under the brands Amaron and PowerZone, has also declared an interim dividend of ₹2.9 per share with a record date on November 16, 2022.

Amara Raja Batteries share price opened higher at ₹548, against the previous closing price of ₹519.80 on the BSE. In the first hour of trade so far, the midcap stock gained as much as 11.6% to hit a high of ₹579.75, driven by a surge in volume trade.

At 10:10 am, the market capitalisation of the company stood at ₹9,875.52 crore, with 5.2 lakh shares changing hands over the counter as compared to the two-week average volume of 0.28 lakh stocks. In comparison, the BSE Sensex was trading 90 points lower at 60,746 levels.

The stock trades nearly 19% lower than its 52-week high of ₹713.75 touched on November 10, 2022, while it hit a 52-week low of ₹438.15 on June 20, 2022. The share price of the multinational conglomerate has delivered a negative return of 18% in the past one year, as compared to an over 1% gain in BSE Sensex. The counter has fallen 9.5% on a year-to-date (YTD) basis, while it has risen 6.5% and 17% in the last six months and one month, respectively.

The industrial and automotive battery major reported a 39.4% growth in consolidated profit after tax to ₹201.22 crore in the second quarter ended September 30, 2022, compared with ₹144.32 crore in the same period last fiscal, Amara Raja Batteries said in a regulatory filing on Thursday.

The consolidated revenue from operations climbed to ₹2,700.47 crore, from ₹2,264.15 crore in the year-ago period.

The company’s total expenses increased to ₹2,449.11 crore compared to ₹2,097.17 crore in the same period last year.

The company, in its earnings report, said it witnessed robust demand in the automotive sector from the aftermarket as well as OEM segments. “Exports showed very healthy growth in the Middle East and South East Asian markets. Industrial battery volumes continued their upswing, especially in the telecom segment driven by 5G rollout preparations in India,” it said.

Harshavardhana Gourineni, executive director, automotive & industrial business, said, “We have rebounded from the cost pressures of the previous quarters and have grown the business across verticals. We are optimistic that the economic drivers will remain stable in the near future.”

The company also announced the incorporation of a wholly-owned subsidiary, Advanced Energy Storage Technologies, which will set up a multi-gigawatt hour lithium-ion cell manufacturing facility.

Vikramadithya Gourineni, executive director, New Energy Business says, "This move allows us to expand Lithium business in a dedicated manner while setting the ground for larger investments and technical collaborations. We are in the process of finalising the location for this investment and should be able to confirm soon."