Amara Raja Energy share price zooms 14% in weak market; here's why

Amara Raja Energy is India's largest automotive batteries and allied products manufacturer. It offers Li-ion cells, battery packs and charging solutions for Light Electric Vehicles & telecom industry.

Amara Raja Energy & Mobility shares today climbed more than 14 per cent on heavy volume in a weak market. Today's sharp rally came after reports said that the company is planning to start bulk production of EV cells from next year.

 

Amara Raja shares opened with a gain of nearly 1 per cent at ₹779.45 on the National Stock Exchange (NSE) and went on to make an intraday high of ₹888.

 

As of 1 PM, the shares of Hyderabad headquartered battery manufacturer were quoting at ₹881. As per details available, 19 million shares of the company changed hands, significantly higher than the previous day's total traded quantity of nearly 0.5 million.

 

 

Amara Raja was also the top gainer from the Nifty Smallcap 100 index, of which it is a constituent.

 

Meanwhile, Amara Raja shares were trading 13.5 per cent higher at ₹879 on the BSE with spurt in volume by more than 22.41 times, according to exchange data.

 

According to Vikram Gourineni, executive director, Amara Raja Energy, the company aims to start its first bulk production of lithium-ion cells by next year. If this happens, Amara Raja will become the second company after Ola Electric Mobility to locally begin the cell production.

 

Besides, the company is also looking to double cumulative lithium energy storage deployment in the telecom sector to 2 gigawatt-hour this year having crossed the 1 gigawatt-hour milestone.

 

The company had in 2022 announced an investment of Rs 9,500 crore over a ten year period to set up research and manufacturing facilities for lithium-ion battery making.

 

Amara Raja Energy & Mobility is India’s largest automotive batteries and allied products manufacturer. It offers Li-ion cells, battery packs and charging solutions for Light Electric Vehicles and telecom industry. 

 

Meanwhile, ICICI Securities said that Amara Raja is approaching E-Mobility through a mix of EV chargers, Li-On battery pack assembly, captive Li-On cell manufacturing and stake in Log-9 materials. The company has in the past has entered into MoU with Telangana government for setting up of Li-Ion Battery Gigafactory. 

 

The facility is expected to have cell manufacturing capacity of up-to 16GwH & assembly capacity of up to 5 GWh, the brokerage said.

 

The company has long has been maintaining a stand at profitability & return ratios economics of Li-On cell manufacturing only work as a sizeable scale of 8-10 GWh and hence the initial manufacturing is expected to be a drag on overall earnings.  CHECK Q4 Results Today

 

Amara Raja Energy stock: Technical view

 

Harish Jujarey, AVP, head - technical equity research, Prithvi Finmart, aid that Amara Raja stock had in March touched a two-year low of ₹670. Since then, the stock has been gradually recovering from those levels. In today’s session, it saw a sharp surge, gaining more than 14 per cent intraday. Technically, the stock has moved above its 50-day moving average, indicating improving short-term momentum. From here, the rally could extend towards the 200-day moving average, which is placed around ₹918.

 

"However, the sharp upmove has pushed the daily RSI above 70, indicating overbought conditions in the very near term. Also, the broader trend still remains in a lower top - lower bottom structure. Hence, it will be important for the stock to cross and sustain above ₹920 to confirm a potential long-term trend reversal," the analyst said.    ======================= 

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