Ladies and gentlemen, good day and welcome to the Amara Raja Q1 FY2026 Earnings Conference Call hosted by Motilal Oswal Financial Services Ltd. As a reminder, all participant lines will be in the listen-only mode, and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during this conference call, please signal an operator by pressing * then 0 on your touchtone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Aniket Mhatre from Motilal Oswal Financial Services Ltd. Thank you, and over to you, sir.
Thank you, Uda. Good evening, everyone. Welcome to the Post Results Conference Call of Amara Raja . At the outset, I would like to thank the Amara Raja management for giving us an opportunity to host this call. From the management team, we have with us Mr. Y. Delli Babu, Chief Financial Officer of the company. I would now like to hand over the call to Mr. Y. Delli Babu for his opening comments on the company's Q1 performance, post-mutual, within the Q&A session. Over to you, sir.
A very good afternoon to everyone who has logged in. Thanks for your time. During the Q1 of the FY26, we consolidated revenues to INR 3,401 . That's a growth of about 4% over the previous year, whereas on a quarter-on-quarter, the revenue growth is about 11%. About 95% to 96% of the revenue comes from the lead-acid batteries, and the rest is coming from the new energy batteries and chargers. The lead-acid revenue per se was around INR 3,270 and the growth of lead-acid battery business on an overall basis is about, on a year-on-year basis, about 4.5%. During the current quarter, the OEM demand was robust along with the aftermarket growth, both in the four-wheeler as well as two-wheeler segments. The four-wheeler domestic aftermarket volumes growth was around 5% on a year-on-year basis, whereas OEMs have grown about 12%- 13% during the current quarter.
Export volumes is where we have a challenge during the current quarter, where there is a degrowth compared to the previous year by about 7%- 8%. Two-wheeler volumes across all segments have grown about 5%- 6% over the previous year. In the other application side, the tubular batteries have shown substantial quarter-on-quarter growth, whereas when it comes to year-on-year basis, going to a weaker season, the growth was limited to about 3%- 4%. The recently launched loops product has continued its growth momentum, and we have seen year-on-year volumes getting doubled as far as the loops sales is concerned. In the industrial segment, the telecom lead-acid batteries volumes have grown by close to 30% over the previous year, whereas we have witnessed a very strong growth on the industrial UPS batteries at about 15% over the previous year.
While the lead-acid batteries had a challenge during the current quarter, the lithium pack volumes have all registered a substantial growth. For the first time on a quarterly basis, we have crossed almost 100 MW of sale of lithium packs to the telecom sector, resulting in the overall market share in telecom being protected over and above 15% that we have been having even in the lead-acid side. As far as the overall [new energy] business is concerned, the revenue was about INR 122 , where it was aided by very strong growth on the storage side volumes, particularly to the telecom sector, whereas the EV side of the business has slowed down during the current quarter due to lower demand from the OEMs that we are supplying to, both on the packs as well as the charger side of it.
We expect this demand to revive in the coming quarters. During the current quarter, into the subsidiary, so far, we have infused about another INR 350 into Amara Raja Advanced Cell Technologies, the new energy business subsidiary. With that, the overall investment into this subsidiary has reached about INR 1,200 on a cumulative basis. The margins of the current quarter were subdued due to the material cost challenges that we have seen even in the previous year, while on a standalone basis, they are at about 11.5%. If I adjust it for the lithium revenues that come into the standalone financials, the EBITDA margin is around 11.7% or so.
These margins are negatively, again, affected by, as I said, the material cost as well as some of the cost increases on the power and employee cost, as well as some revised provisioning that we are doing for our warranty claims. The trading revenue also, because our tubular factory has just commenced its production sometime in the month of July, so some of the first quarter requirement was still met with the trading piece. The trading revenue mix also has increased by almost 4% in Q1 on a viable basis. What used to be 19% in last year, the trading revenue today in this current quarter is about 23%. That also has shown a bit of a dilution on the EBITDA margin.
Now that the manufacturing activity has commenced, in the coming quarters, I think we will reduce the trading of home UPS tubular batteries and then replace them with our manufactured tubular batteries. As far as CapEx is concerned, I think we continue to have to project about INR 1,200- INR 1,300 of CapEx for the current fiscal. A substantial part of it, about INR 800- INR 900 of it, will be spent on the new energy projects that are currently running and for completing them. The rest will be spent on the lead-acid battery side. That's a quick brief of the Q1 results. I would request any questions from your side. We're happy to clarify.
Thank you very much. We will now begin with the question and answer session. Anyone who wishes to ask a question may press star and one on their touchtone telephone. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. The first question is on the line of Dagu Nandan from Nuvama Research. Please go ahead, sir.
Thank you, sir, for the opportunity. Sir, firstly, on the volume side, you indicated that export has seen a deep growth. How do you see the outlook forward there?
Yeah, I think some of the additional volumes that we are expected to get from some of the part of markets has kind of weakened during the current quarter. We hope this derived scenario will settle down in the next one or two quarters, and then we will again be back on a growth momentum. The regular markets, APAC, and Middle East are also seeing some bit of competitive intensity going to all these tariff challenges that we are seeing. We hope to again increase the volume momentum by expanding into other markets and then revive this growth momentum in the coming quarters. I think we will have a challenge at least for the next one or two quarters, and after that, we expect that some of the market penetration activities that we are doing now should result in volume growth in the coming quarters.
Thank you, sir. On the industrial side, telecom was a 30% decline, lead-acid. UPS was 15% growth. How much was the growth on the total industrial side, sir?
With this, it's kind of negated. There is no growth on the overall volumes. In fact, if you look at 30% degrowth and 15% growth in UPS, it will result in a degrowth of industrial lead-acid volumes by about 3% - 4%.
Got it, sir. For home inverter, how much has it been on viable basis?
It was a 3%- 4% kind of an increase.
Increase. Okay, got it.
Yes.
My second question was on the margin side. The traded mix has increased, and you said this will normalize in the coming quarter. Within margin, there is also some underrecovery because of the increase in input costs like antimony. I just wanted to understand how much is the underrecovery, whether more price hikes will be taken, and whether traded mix will also normalize in the coming quarter. All that should lead to margin expansion ahead?
See, as far as antimony is concerned, I think it is now getting stabilized at a given level. As you know, we have taken some price increase in Q4, and thereafter, the competitive scenario doesn't permit us to think about a further price increase immediately. I'm sure if it persists at this level, some pricing action will be taken, or there will be some improvement on the material side that we can consider. On the other side, on the expenses, yes, I am hoping in the coming quarters, some of the power-related issues, once they get settled, I think we should see some benefit that can accrue to us in the coming quarters.
While I am unable to give you a particular number on what could be the margin improvements, I am seeing maybe Q1 and Q4 of last year are the worst that we have seen, and we can only improve from here slowly but surely.
Thank you, sir. Lastly, on the lithium cell project update, we will be investing about INR 850 last year. Another INR 800 - INR 900 i s the investment this year. By FY27, when the facilities are likely to be operational, how much will be the total investment? The facility which will come up, will it be both NMC and LFP? What capacity will it be?
Yeah, as I mentioned earlier, the first capacity that will come is only of NMC, where we are going to make the 21,700 cells. The initial capacity will be 1 gigawatt-hour. Thereafter, we will see if it needs to be expanded to 2 gigawatt-hour, or should we go with an alternative LFP cylindrical cell of 30- 140 form factors? That is a decision that we are ready to take on. For completing these three projects, I think we will be needing, apart from what we have invested, so far, we have invested INR 1,200 into the subsidiary, which is not only used for CapEx, but also used for some of the working capital requirements. We should be required to infuse another INR 1,200 for us to complete the research lab, customer qualification plant, as well as the first gigafactory with about 1 gigawatt-hour capacity.
I got it, sir. Any update on the customers, sir? We had added earlier a few customers like Ather and all. Any further updates?
I think there are discussions both happening at the low voltage as well as high voltage sites. There is nothing that I can disclose at this point of time.
Thank you very much, sir. I'll fall back to the queue.
Thank you. A reminder to all participants, you may press star and one to ask a question. The next question is on the line of Kapil Singh from Nomura. Please go ahead.
Yeah, hi. Good evening, sir. Sir, I noticed that your four-wheeler OEM growth is quite strong during the quarter. Could you give some color? Because the industry has not grown during the quarter. Have we gained some market share, some new customers that we have added here?
No, see, as you know, it all depends on the platform that we are participating and where we are getting a bit of a higher volume in certain OEMs. The number of customers that we are operating has not changed anything during the current quarter, but only some of the allocation that we have received on some of the platforms that we are participating has increased. Beyond that, there is no specific reason as such.
Okay. Sir, just to refresh, in terms of the unorganized market now, would you have an estimate like what % of the market is unorganized in the aftermarket in four-wheeler and two-wheeler?
It still remains around 10%- 15% range, depending on which product segment that we are talking about. Both in four-wheeler and two-wheeler, I think it is around that 15% mark.
Has it been coming down?
I think it has been at that level of middle double digits for some time now. I am not seeing a sharp reduction out of it. At least for the last three years that I am seeing, some quarters, our estimate suggests that some quarters it goes down to maybe lower double digits. In some quarters, like where there is e-rickshaw demand or tubular demand picks up, it comes back also. It is still at around that number.
Sir, these are smaller regional players, or these are like players who are unorganized players? How would you classify them?
Both put together, barring the four or five large players, the rest of them who are very, very local brands and even some of the totally unorganized players.
Okay. Understood. Sir, last time you had on the lithium-ion side, last time you had mentioned that the LFP price had dropped to closer to $50 also in some cases. How has that moved during the quarter?
Recently, we have seen some uptick at the raw material level, but we are yet to see that translating into price change at the cell level. I think our reading at this point of time is there could be a possible upward movement at the cell prices also because some of the base raw material, there is an uptick in the price. How much of that will come into the market is something to be seen. We believe the $50 mark could be the bottom most, and from there, it can only move up.
Sure, sir. Lastly, just on the capacity that.
Thank you, Kapil Singh, but I request you to rejoin the queue for the follow-up question.
Sure. Thank you.
Thank you. The next question is on the line of Mukesh Saraf from Avendus Spark . Please go ahead.
Yes, sir. Good evening, and thank you for the opportunity. My first question is on margins. I mean, when we saw that this quarter, the margins were at 11.5%. You did mention that antimony is now probably stabilized. When I look at lead on a -2 basis as well, it looks like it is more or less flat. We're also seeing the tubular plant up and the refinery for you on the recycling up. Is it fair to say that from here on, we should go back to our typical margin range, 13% odd?
Yes, Mukesh, that's what my estimate also at this point of time. It depends on how in the coming quarter, the inverter season will behave. You know the current very, very low demand considering the way the weather is behaving. I think with recycling, the refining operations have started. Battery creating operations will take another two, three months to start because the ramp-up process is currently on. I hope we will only move upward movement in terms of the margin of electricity.
In the last, say, three months, any pricing actions you've taken in the aftermarket?
No, nothing in Q1. It was taken in Q1 last year.
Okay. Okay. Just lastly, telecom now on the lead-acid side, telecom will be how much there for us? About 5% or 6% of revenue, overall revenue?
Telecom overall revenue will be above, yeah, it should be around.
The lead-acid side of it.
6%- 7%. Yeah.
6%- 7%. Okay. Yeah, got it, sir. Thank you. That's it from my side.
Thank you. The next question is on the line of Samraat Jadhav from Prosperity Wealth Adviser. Please go ahead.
Hi, good evening. Can you please provide me an update on the ramp-up facility of our tubular plant at Chittoor and the battery recycling plant at Cherr? Any delays or challenges you're expecting there, or is it on time?
No, no. See, the tubular plant is quite as expected. We are able to ramp up. July, we have commenced our commercial production. It will take generally about two to three months to reach its full capacity. Thereafter, it will run at its stated capacity of about 150,000 batteries per month. There are no challenges as far as the tubular battery ramp-up is concerned. As far as the recycling plant, the refining operations are going smooth. We are able to ramp up the entire refining operations pretty nicely. The battery breaking operations is where the general trial run term itself takes about four to five months. We are in the midst of that journey right now.
We expect that the battery breaking operations to come into full swing sometime around October, November, provided all the trial runs go as per our expectation because this being a very state-of-the-art machinery, we are working with the vendor from Italy very closely. We expect this to come online sometime around October and November.
Okay. The gigafactory?
The cell factory construction has just started. As far as the CQP and research lab is concerned, equipment orders are all done. We have slowly started getting one or two equipments arriving. We expect the customer qualification plant and the research lab to be functional by the end of this financial year, and/or maybe research lab could be ready by the end of this calendar year itself. As far as the gigafactory is concerned, just now the building construction has just commenced. Now we are discussing on the equipment side of it. I think we have earlier said that FY2027 end is when we will see the commencement of gigafactory, first gigafactory as well. A quarter here and there, I think we should be fine to hit those timelines.
Okay. Great. Thank you. That's the one to draw my question. Thank you.
Thank you. The next question is on the line of Girish Kumar from Valtro. Please go ahead.
Girish, can you hear me?
Yes, I can hear you.
Can you hear me?
Yes, I'm much.
Yes, I can hear you [Crosstalk].
Can you hear me, sir?
Okay. Sir, I have one question. Given the rising demand for battery energy storage systems in India, is Amara Raja exploring any opportunities to participate in this space?
Yes, very much. I think energy storage system is a very important area for our growth from a solution side because there are three segments to this market. One is the retail home level. Second is the commercial and industrial level. Third is the grid level. All three levels, we are trying to now develop our own solutions and then see how we do, how do we go for these three segments differently. There is a separate team that is working on this. While I'm unable to give you a very specific timeline in terms of when the revenues will kick in, I think in the coming quarters, we can have some update around it. There is a very clear focused team that is working on tapping these opportunities on all these three customer segments around this.
Oh, thank you, sir.
Thank you. A reminder to all participants, you may press star and one to ask a question. The next question is from the line of Kapil Singh from Nomura. Please go ahead.
Yeah, thanks for the opportunity. Sir, I just wanted to check the initial capacity on the lithium-ion side that is coming up. Which will be the primary product categories that we will be targeting with that?
As I mentioned, the NMC is the form factor, and predominantly, it will be a two-wheeler application and some of the high-level power tool applications as well. It will be a predominantly two-wheeler application. There could be very small parts of storage applications where NMC cells might be required, but its predominant focus will be on the two-wheeler side.
Okay. Sir, some customers are talking about the fact that they will start shifting towards LFP in case of two-wheelers. I just wanted your perspective on the same.
Oh, yes. I think that is why from the beginning, we have been saying NMC will not have a very significant portion of the total product portfolio. We continue to remain that strong. That is why we are now, earlier, we thought of going ahead with a two-gigawatt capacity for NMC. Now we are saying we'll go with one gigawatt to start with and then see whether we should go with the same form factor or should we go to the LFP cylindrical cells as well. There is a very clear message that we are also seeing in the market, even with the OEMs that we are currently working on the three-wheeler side as well. We are seeing that shift of chemistry from NMC because LFP offers that cost advantage as well. That has been the way that we felt the market will behave.
I think there is no change in that process.
Sir, lastly, I'm sure you would have been following the news flow on GST. Still, we are not clear, you know, what exactly will happen. If rate rationalization happens, I just wanted to understand from your perspective, how would you see which are the segments where you see Amara Raja could benefit? Just whatever is your perspective of making?
Yeah, from a traditional lead-acid battery point of view, it puts lead-acid batteries on par with lithium because today, lithium's GST is about 18%, whereas lead-acid batteries are subjected to 28%. The first thing that will happen is both the batteries will come onto the same tax rate level. That is number one. Number two, the raw materials that we are sourcing are also taxed at 18%. To that extent, the overall working capital burden that will be there on the company also will come down. That's one advantage of GST rates coming down from a very, very, I mean, top-level perspective. When we look at the other side of the supply chain, where the scrap batteries where we are procuring, which are currently subjected to about 18% GST, if some rationalization were to happen on that as well, that would make our entire collection process a lot more easy.
If the GST rates on scrap batteries also were to come down, then I think that would also help the entire recycling process becoming more and more organized. Thereby, the collection process will get a lot more streamlined. That way, the presence of an unorganized segment also might get a bit of a, I mean, they may find it a bit difficult to source their lead, given that more and more scrap players are going to come into the GST net. That would be a very good advantage. I don't know whether the government is thinking about reducing the scrap GST also. At the finished product level, it has only one advantage of putting it on par with lithium and also reducing some bit of working capital to the battery makers.
Sure. Just one clarification here. For the electric vehicle batteries, what is the GST rate? Also, for the scrap batteries, what is the GST rate currently?
Scrap batteries also, it is at 18%. For fully finished batteries, it is 28%.
For EV batteries, what is it?
It is 18%. GST is 18%, whereas the basic customs duty for the cells is at 5% because the government is giving a 15% concession there.
Okay. Thank you, sir. I wish you all the best.
Thanks.
Thank you. The next question is on the line of Vibhav Zutshi from JP Morgan. Please go ahead.
Yes, hi. Thanks for the opportunity. I am just trying to compare the Indian lead-acid battery market size from your annual reports. It looks like it is kind of flatlined at that INR 36,000, INR 37,000 level. If I compare the FY 2021 annual report to the FY 2025 annual report, is it true that the battery market size is flattish over the last few years, or there could be some assessment-related challenges over here?
See, our estimate is, I don't know the basis of the INR 36,000 number, but our estimate was around INR 40,000 . I think we know that there are downside risks as far as storage is concerned because we are seeing what's happening in the telecom side. Whereas on the mobility side, given the OEM sluggishness that we are seeing for a reasonably good period now, that could kind of hit some kind of a plateauing curve going forward. Also, on the home point of view, if even the home inverter and then home solar application, if that were to also get migrated to lithium, then there is an issue with it. Right now, we believe the growth rates will remain strong as far as the mobility sector is concerned.
Storage side, it will depend on how the lithium prices will move and what impact it will have on the overall cost of ownership for these players. That's how we looked at the market. We believe lead-acid battery business has an overall growth potential, including the international markets where we are operating. I think we should see a growth in the range of 10% at least for a reasonable period.
Okay. Got it. That's helpful. Basically, probably somewhere around $4.6, $4.7 billion. Probably higher export volumes could be an offsetting factor that could keep volumes higher. Like you mentioned, telecom and certain other industrial aspects are expected to be flattish, but probably export opportunity could be a key reason why.
Correct.
Okay. Got it. Got it. Thank you.
Because the penetration also is not playing in a uniform manner, right? In some quarters, we are seeing a very good uptake. In some quarters, there is a downtrend. We have to establish a very clear trajectory as far as the Indian market is concerned. It is the same thing even in some of the export markets also. I think we just need to wait for some more data before we conclude.
Got it. Thank you, sir.
Thank you. A reminder to all participants, you may press star and one to ask a question. The next question is on the line of Shubham Badra from Ambit P and C. Please go ahead.
Hi, sir. Thanks for taking my question. Sorry if I am repeating the same question. Firstly, when do we expect the battery manufacturing capacity to come up, and what is our ramp-up plan? Secondly, have we established the supply chain for electrolyte source? Who are we trying to procure it from?
See, if you are asking about the lithium batteries, the supply chain is clearly everything is from China only, I think, except for a few components that we expect that Indian manufacturing will start. Most of the basic raw materials of cathode and anode materials, including electrolytes, it will start only from imports from China. It will take some time for the Indian ecosystem to really ramp up.
Okay. Sir, when do you expect the manufacturing to come up, the battery manufacturing? What is the timeline?
Yeah, as we said, sometime around the end of FY 2027.
Okay. Thank you, sir.
Thank you. The next question is on the line of Aniket Mhatre from Motilal Oswal . Please go ahead.
Yeah. Hi, sir. Just quickly on our demand outlook, sir, could you help us understand the outlook for your various segments, both autos and non-autos?
See, on the non-autos, clear, UPS, I think, as we mentioned earlier, while this quarter we have seen a very strong demand, I think our expectation is on an annualized basis, it should still grow around the 5% to 6% kind of a growth number. Whereas when it comes to the automotive aftermarket, both two-wheeler and the four-wheeler, we expect the aftermarket to grow around 6% to 7% kind of a number. Whereas the two-wheeler might grow around 10% to 11%. That's the growth number that we are expecting. Exports, while we expect to grow more around 15%, this year, I think it may be subdued given the supply chain challenges that we are seeing across the markets because of these tariffs and all. We have to see how exports will perform. We have seen a contraction as far as the stock quarter is concerned.
We hope once we expand our presence in some of the other markets that we are trying to penetrate, we should be able to revive our growth numbers in spite of these challenges. This year could be a tough year for exports. Assuming things settle down towards the second half of the year, I think still we should be able to pull up. Exports is the area where I'm not too very certain about.
Sure. On the industrial part?
Yeah, on the industrial, I think I have already mentioned the telecom is anyway going to be a migration story. We continue to maintain more than 50% market share in telecom. UPS, we expect it to grow around 5% to 6%.
Right. Just finally, on this power cost issue, sir, how, I mean, by when do you expect this to get resolved for us? Any timeline?
Yeah, I'm expecting this to get resolved by the end of the current quarter or at the best by the beginning of Q3. I think there are some good developments that are happening right now. We hope this whole issue will get settled down in the coming quarters.
Is it fair to assume that, excluding the power cost, the other headwinds are largely the elderly and the tubular battery bills are ramping up, and even the R&D is normal days? Excluding the power cut, I think Q2 onwards, we should start seeing the pickup in margins. Is that a fair assessment?
Yeah, that's the expectation. Obviously, we have to wait and see until the Q2 gets closed.
Sure, sir. Got it. Thanks. That's it for me, sir.
Thank you. A reminder to all participants, you may press star and one to ask a question. The next question is on the line of Saurabh Ved from Anantya Capital. Please go ahead.
Hi, sir. My question is that as Amara Raja scales its new energy business and deepens its focus on advanced chemistry, how are you approaching talent acquisition for the R&D center, especially in cell design, electrochemistry, battery management sector? Is the required engineering talent readily available in India, or are you building capabilities through global partnerships or internal upskilling?
Yeah, there is clearly a three-pronged approach here. One is obviously working with some of the talent that are available elsewhere in the world, and then understanding and then tapping that through our internal talent. Secondly, some expat recruitments that we are able to do not only in the cell design side, but also on the ESS and other packaging solutions side. Thirdly, obviously working with some of the partnerships that we have built and then absorbing the technology through the existing talent. I don't think there is only one approach, but largely, the idea, the reason why we are running behind investing a good amount into the research side of it is precisely to develop the talent and invest in that capability for the long- term.
Today, we have roughly about 150- 200 engineers working on these spaces on cell technology and design and a few others working on the pack side. I'm sure we need to ramp that up as and when we start our giga journey further, as and when we ramp up the gigafactories further. There is no single solution that can follow all the talent around this.
Right. Got it, sir. Thank you.
Thank you. As there are no further questions from the participants, I now hand the conference over to the management for closing comments.
Thanks, everyone. Thanks for your time and questions. Hope to reconnect with you soon. Thank you.
Thank you. On behalf of Motilal Oswal Financial Services Ltd, that concludes this Conference. Thank you for joining us, and you may now disconnect your line.