Motilal Oswal Stays 'Neutral' On Amara Raja Post Weak Q1 Results — Check Target Price

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Motilal Oswal Report

Amara Raja Batteries Ltd.’s venture into the lithium-ion business is strategically sound given the opportunities in the segment and risks facing its core business. However, there are notable challenges:

1. market opportunities are limited by existing OEM partnerships;

2. low-margin nature of lithium-ion business is likely to dilute returns; and

3. long-term viability of technology remains uncertain despite the large capital investment.

While the market is optimistic about Amara Raja’s li-ion initiative, we are cautious about its potential returns. We believe the stock, trading at around 21.1x FY26E /17.2x FY27E EPS, appears fairly valued.

Therefore, we maintain a Neutral rating with a target price of Rs 1,030, based on 18x Jun’27E earnings per share.

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