Amara Raja in FY26: revenue growth, margin pressure, and a clear build-out in new energy

Amara Raja Energy and Mobility Limited closed Q4 FY26 with steady top line growth and a sharp uplift in reported profit, helped by exceptional income. Consolidated revenue from operations rose to INR 35,357 million, up 15.5 percent year on year versus INR 30,601 million. EBITDA increased 13.1 percent to INR 3,855 million, even as EBITDA margin softened to 10.9 percent from 11.1 percent. Reported consolidated PAT almost doubled to INR 3,143 million, compared with INR 1,616 million in Q4 FY25, driven materially by exceptional income linked to an insurance claim.

For the full year, the picture is more nuanced. FY26 consolidated revenue grew 7.5 percent to INR 1,38,140 million. But profitability compressed as operating costs and depreciation rose. EBITDA declined 7.4 percent to INR 14,971 million and margin fell to 10.8 percent from 12.6 percent in FY25. PAT came in at INR 8,958 million, down 5.2 percent year on year, with PAT margin at 6.5 percent. The company ended the year with diluted EPS of INR 48.95 on a consolidated basis.

Behind these headline numbers is a business that remains anchored in lead-acid batteries, but is deliberately preparing for a longer transition. The quarter showed continued strength in the lead-acid automotive franchise, stable domestic aftermarket growth, and robust inverter battery sales. At the same time, the industrial lead-acid telecom segment continues to structurally decline as lithium solutions take share. This shift is important because it explains both the near-term pressures and the rationale for the group’s accelerating investment cycle in lithium-ion cells, packs, and energy storage.

Q4 FY26: growth led by lead-acid, with new energy gaining visibility

Q4 FY26 revenue mix continued to be dominated by the Lead Acid Business. Lead-acid revenue was INR 32,547 million, accounting for 92 percent of total revenue, while other businesses contributed INR 2,810 million or 8 percent. The direction of travel is notable. The other businesses share has been moving up from 5 percent in Q4 FY25 to 7 percent in Q3 FY26 and 8 percent in Q4 FY26, indicating a gradual scaling of the newer segments.

Geographically, Amara Raja remains primarily domestic. Domestic revenue was 89 percent in Q4 FY26 at INR 31,511 million. Exports were 11 percent at INR 3,846 million. For FY26, exports were described as about 12 percent of sales, and the company’s stated ambition is to extend its presence from 70 plus countries to 80 plus countries by FY30.

Operationally, management commentary points to resilience in core automotive lines. Four-wheeler OEM volumes sustained double-digit growth. Inverter battery sales grew strongly, with the majority of sales coming from in-house manufacturing, suggesting that internal capacity is being utilized and value capture is improving. Domestic aftermarket volumes were stable. The industrial lead-acid telecom segment, however, continued to decline as lithium replaces lead-acid in tower applications.

On the new energy side, the quarter marked an important milestone in telecom lithium packs. Cumulative supply crossed 1 GWh during Q4 FY26, and the quarter saw the highest ever telecom supply of over 300 MWh. The company also disclosed that it infused INR 1,500 crore into Amara Raja Advanced Cell Technologies through March 2026, highlighting both commitment and capital intensity. The Customer Qualification Plant was under commissioning and is expected to be operational soon.

FY26 profitability: costs rose faster than revenue

FY26’s revenue growth was real, but the margin math worked against the company. Total expenses rose 9.7 percent to INR 1,23,169 million, outpacing the 7.5 percent growth in revenue. Depreciation increased 15.5 percent to INR 6,072 million, reflecting sustained investment and expanding asset base. Finance costs were largely flat at INR 445 million, which is consistent with the company’s positioning of minimal debt on the books and its AA plus credit rating.

The annual results include exceptional income of INR 2,553 million. Management notes that net exceptional income includes INR 1,218 million and INR 1,812 million towards insurance claims on a plant. In Q4 FY26 specifically, exceptional income of INR 1,812 million related to an insurance claim towards the tubular plant, while Q3 FY26 had an exceptional expense due to change in Labour Code.

The company also provided a useful operational indicator of underlying lead-acid profitability. Lead Acid Business EBITDA percent was 12.3 percent in Q4 FY26 and 12.3 percent in Q3 FY26, compared with 11.8 percent in Q4 FY25. Management noted that margins include efficiency from the captive recycling plant and that operating margins were sustained despite raw material price pressures. For FY26, it also noted that Lead Acid Business EBITDA percent is about 12.2 percent considering efficiencies from captive recycling operations.

This is an important distinction for investors. Consolidated margins are being weighed down by the scale-up costs of new energy and by higher depreciation. But the core lead-acid franchise appears to be holding up in operating terms, helped by recycling integration and an established distribution engine.

The operating base: lead-acid scale and a circular economy lever

Amara Raja’s lead-acid business remains the earnings backbone. The company has four decades of experience, strong brand recall in automotive batteries, and leadership positions in telecom and data center segments historically. Operationally, it runs 14 manufacturing facilities with about 70 million units of annualized capacity for automotive batteries and about 2.4 billion AH of industrial batteries capacity. It exports to 70 plus countries and employs about 12,000 people.

The company’s manufacturing footprint includes plants at Karakambadi and the Amara Raja Growth Corridor for automotive and industrial lead-acid, a tubular plant, and a battery recycling plant at Cheyyar. The recycling plant is a key strategic asset because it fits both economics and ESG. The current refining capacity is 100,000 MT per annum with an eventual capacity of 150,000 MT per annum. The sustainability section states that about 88 percent of lead and lead alloys come from recycled sources, indicating meaningful circularity already embedded in the cost structure.

This matters in a commodity-linked category like lead-acid. When raw material prices move, integrated recycling can provide partial insulation and improve working economics. Management explicitly cited efficiency from the captive recycling plant as a margin support factor during the quarter.

Demand drivers in lead-acid are also steady rather than disappearing. The company cited projections that India’s lead-acid battery market could reach USD 6.2 billion by FY2031 and the global market could reach USD 64.2 billion by FY2031. The reasons are familiar: lower upfront cost, established service ecosystem, mature and reliable technology, and high recyclability. Amara Raja is leaning on this stability while it funds a more uncertain but larger long-term opportunity in lithium-ion.

New energy: commissioning now, scale later

The new energy plan is broad, but the milestones are specific. The Customer Qualification Plant at Divitipally is under commissioning, with full scale operation expected in Q2 FY27. The facility is designed to support diverse form factors and multiple cell chemistries. This is a critical step because qualification and pilot production can determine the pace at which customer programs move from sampling to volumes.

The Giga-Cell Factory at Divitipally is planned in phases. Phase 1 of 2 GWh is expected to commence in Q2 CY27, with an ambition to reach 16 GWh capacity by FY30. Separately, the company outlined a 5 GWh BESS Giga Facility, to be set up by ARACT, with start of production targeted for Q4 FY2027 and capex outlay of INR 280 crores. The company linked this to renewable energy policy push, with cited annual demand for BESS rising from 1 GWh in FY26 to 25 to 30 GWh by FY31.

The product portfolio already includes battery packs for 3W and 2W that are developed, with 4W under development. Chargers for stationary and AC DC are developed, and the company is working on both cylindrical and prismatic cells. It also stated that it successfully designed and developed a nickel-rich 21700 NMC cylindrical cell.

Manufacturing capacity in packs is being built in parallel. The stationary pack assembly plant at Tirupathi has capacity of about 1.2 GWh, while the mobility pack assembly plant at Divitipally has capacity of about 1.5 GWh. This sequencing suggests a near-term focus on packs and solutions, while cell manufacturing ramps in phases.

R&D is being positioned as a differentiator through E Positive Energy Labs. The company cited 200 plus engineers and scientists, a 2.2 lakh square feet R&D center, and four test and validation labs with capability to build cylindrical and prismatic cells and perform material characterization, cell and pack testing. It also stated that it achieved IATF 16949:2016 and ISO 9001:2015 certification for Li-ion batteries.

Strategy and execution: defend the core, fund the transition

The company’s strategic framing is straightforward. In lead-acid, the priorities are market share protection, strengthening the brand and channel, and a robust new product pipeline including solar, advanced home energy solutions and other ancillaries that can ride the existing distribution network. Internationally, the focus is to expand presence in Europe and the Americas while deepening APAC and MEA, supported by enhanced marketing investment and localized branding.

For industrial, the direction is to tap emerging growth segments such as BESS across C&I applications, sustain leadership in India, expand telecom energy solutions into global export markets, and build capabilities for chemistry-agnostic solutions. This last point ties the two worlds together. Customers increasingly want integrated solutions, not just a battery, and the chemistry choice may depend on use case.

In new energy, the four pillars are technology partnerships and lab build-out, customer-specific product development enabled by the Customer Qualification Plant, supply chain alliances with a roadmap for domestic value addition, and hiring global subject matter experts.

Digital transformation appears as an enabling layer, organized around data analytics, enterprise AI capability, and a dealer management system. This matters because distribution efficiency and working capital discipline can protect margins when gross margins are pressured. The company cited initiatives such as a dealer collections solution program with integrated payment gateways and auto reconciliation to improve collection efficiency and DSO.

Balance sheet and investor view: capacity build reflects in assets and returns

Amara Raja’s balance sheet expanded in FY26, reflecting capex. Consolidated total assets rose to INR 1,14,567 million from INR 1,01,683 million in FY25. Property, plant and equipment increased to INR 37,695 million and capital work in progress stood at INR 15,847 million, both consistent with ongoing projects. Equity rose to INR 80,990 million.

Returns, however, have come down as profits softened and the capital base grew. Consolidated ROCE was 12.0 percent in FY26 versus 16.2 percent in FY25, while ROE was 11.6 percent versus 13.3 percent. The company also noted ROCE excluding long term investments is about 12.5 percent for FY26.

This is a familiar trade-off in transition stories. The company is funding capacity and R&D ahead of revenue maturity in new energy. In the near term, that tends to compress returns and margins. The investment question is whether execution timelines hold and whether the portfolio moves from telecom and early mobility packs to higher volume OEM programs.

Sustainability: circularity and resource discipline as structural supports

ESG is not presented as a side note. The company highlighted a net zero commitment by 2050, aligned with SBTi and a 1.5 degree pathway. It reduced intensity of Scope 1 and 2 emissions by 36.8 percent over FY22 and has a renewable energy share of 21.5 percent with captive renewable at 66.9 MW. On water, it highlighted zero liquid discharge plants, reduced absolute water consumption by 16 percent and intensity by 56.8 percent against FY22, and a third-party certified 12X water positive status.

On circularity, it stated that 99 percent of manufacturing waste is recycled and waste generation intensity reduced by 33.5 percent against FY22. It also noted compliance with Battery Waste Management Rules, 2022 as extended producer responsibility. The lead recycling plant commenced operations in FY25 and is directly linked to sourcing, with about 88 percent of lead and lead alloys from recycled sources.

These points matter because they reinforce a competitive edge in lead-acid, where recycling economics and compliance can separate scaled players from smaller ones. They also support customer conversations in lithium, where ESG and supply chain assurance increasingly influence qualification.

Takeaways for investors

Amara Raja’s FY26 story is best read as two tracks running at once. The lead-acid franchise delivered revenue growth and stable operating performance, helped by brand strength, distribution depth, and captive recycling efficiencies. But consolidated margins and returns softened as costs rose faster than revenue and as the company carried higher depreciation and transition investments.

The new energy business is no longer only an option on the future. Telecom lithium packs crossed 1 GWh cumulative supply, and the investment program is tied to specific commissioning and production timelines. The Customer Qualification Plant is expected to be fully operational in Q2 FY27, the BESS facility targets production in Q4 FY2027, and the giga-cell ramp is planned in phases to reach 16 GWh by FY30.

The near-term investor focus is likely to stay on three execution markers. First, how well the lead-acid core sustains margins amid raw material volatility and a declining telecom lead-acid demand. Second, whether new energy milestones are met on time, especially commissioning and customer qualification. And third, how the company manages the transition without eroding balance sheet strength.

The quarter ended with a sense of strategic clarity. The core business is being defended with operational discipline and circularity advantages, while the future business is being built through capacity, R&D, and qualification infrastructure. If project timelines hold and customer conversions follow, FY26 may be remembered as the year Amara Raja moved from intention to visible execution in India’s energy transition.