Amara Raja Energy & Mobility: New Energy Revenue Up 30%

ARE&M Amara Raja Energy & Mobility (NSE : ARE&M) is a legacy lead-acid battery manufacturer building a lithium-ion business. It is investing Rs 9,500 crore in a Giga Corridor in Telangana through its subsidiary Amara Raja Advanced Cell Technologies (ARACT), with Rs 2,100 crore invested to date. What happened: In Q2FY27, new energy revenue was Rs 232 crore, up over 30% year on year and now about 6% of consolidated revenues. Telecom packs led growth with lithium pack volumes up 15%, offsetting softness in EV demand. The board approved Rs 2,320 crore capex for a 5 GWh LFP cell plant and pack assembly expansion from 4 GWh to 9 GWh. Why it matters: India's advanced chemistry cell demand is set to grow from 25 GWh to 140-150 GWh by 2030. ARACT's Giga 1 is a 2 GWh NMC plant with commercial operations in Q2FY28. A 10 GWh BESS facility begins trial production in December 2026 and commercial operations in January or February 2027. BESS systems are priced at US$ 90 to US$ 100 per kilowatt-hour. What I am watching: Whether Giga 1 commissions on schedule and the BESS facility ramps to guided 50-60% utilisation in FY28. Imported cells from China make up about 70% of BESS container costs, a cost disadvantage until domestic production scales up. Management targets full utilisation of the initial 5 GWh BESS phase by FY29. My stance: Amara Raja trades at 18.1 times earnings, below its 10-year median of 21 times and well below the industry at 29.2 times. ROCE is 13.4% and ROE is 10%. The core business generates solid returns and the new energy pipeline is well-funded. The discount to peers offers a margin of safety if the gigafactory ramp executes as planned. I do not hold a position in Amara Raja Energy & Mobility at the time of writing. This is not investment advice.