EV adoption won’t take off significantly unless it gets to place where it’s near competitively priced with ICE vehicles.
Even in markets like US and China ICE vehicles are still dominating in sales.
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Gautam Ji, What conclusion we should draw from this. (Please accept my sincere apology, if my question is too silly)
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We see a decrease in Lead prices as per LME exchange.
Which does impact battery space businesses. Also, a long historical movement to visualize volatility.
Kind of a overhang apart from the BAU at Amara raja. Might help Mcap for Amara raja
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Some discussion around battery companies.
Calls it a day in politics and will start to focus on Amara raja as per news
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Galla, 57, is one of the richest MPs in Lok Sabha with a declared asset of around Rs 683 crore. Amara Raja is moving from being a battery manufacturer to a comprehensive provider of energy and mobility solutions. “It is with a heavy heart that I announce my decision to not contest in the upcoming 2024 general elections. I will be taking a break from politics to focus on diversifying the business which is at a crucial stage of leading the world in the transition to a more sustainable future,” said Galla, who represents Guntur in Parliament.
Bold letter represent : positive for business.
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PE is low, ROE is better than Exide. Promoter returning back to participate in renewable game.
Looks like low risk bet.
Disc : Not invested, will do soon.
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Looks like a breakout in stock on news of Mr Galla exiting politics . Has a potential of giving multibagger returns from here considering the tailwinds in Industry and its financials compared to Exide . Waiting for this quarter results and management commentary to confirm my views
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Microsoft Word - Outcome of Board Meeting - January 31. 2024 (bseindia.com)
Result
Microsoft Word - Outcome of Board Meeting - January 31. 2024 (bseindia.com)
Press release.
Concall on 02.02.2024, so get better idea on Mangal Industries Merger and future giga factory.
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Amara came out with decent results with sales and EPS growing by 15%. It seems that their new energy business benefitted from lower lithium cell prices. This also brings into question future of lithium battery business, at a scale of 7-9 GWh, they expect to make 10-11% EBITDA margin at current cell prices of $80/GWh. They even went on to say that given the Chinese overcapacity, EV penetration has to reach 50% for the business to be lucrative. And market is most excited about this division! Concall notes below
FY24Q3
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Lead acid battery : 13% YOY growth
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4-W volumes : OEM: 2%, after-market: 11%
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2-W volumes : OEM: 30%, after-market: 15%
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Industrial volumes : growth of 6-7% (telecom: 8-9%, UPS: __%)
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Home inverter volumes : no growth (only doing trading currently)
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Exports : 24% YOY growth (4-W AGM batteries: 25% volume growth). Revenues are recognized after delivery. Catering to large retail chains
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RM pricing : 200/kg (have not taken any price hike)
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Trading revenue of 7%
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50% of volume is from after market
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New energy business :
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148 cr. (vs 150 cr. in Q2 and 68 cr. in Q3FY23). 80% battery packs of 2-W and 3-W (Mahindra and Piaggio are main customers with 2-W being small)
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Successfully powered an E-Bike using in-house NMC based 2170 cylindrical cells
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Have started supplying battery pack for telecom (BSNL) and for industrial applications
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Small cell towers have seen adoption of lithium packs
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Tubular battery plant will be ready in March 2025
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Plastic component acquisition from Mangal Industries is now complete, effective date will be 01.02.2024
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Lithium cell : currently estimate 10-11% EBITDA margin (at current lithium prices) with 10-11% ROE at 7-9 GWh scale (@$80-90/GWh)
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Given the Chinese overcapacity, EV penetration will have to reach 50% for business to be lucrative
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FY24 capex: 250 cr. (lead) + 250-300 cr. (lead recycling + new energy). Recycling plant will commence in Q1FY25
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FY25 capex: 600 cr. (mostly around new energy)
Disclosure: Invested (position size here, no transactions in last-30 days)
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Is there a way to know market share of Amaraja for telecom towers ?
Made a presentation on Amara Raja in the VP Kolkata Meeting in December. Attaching the presentation below for more information and my investment rationale in ARE&M.
Presentation - Amara Raja v1.pdf (5.9 MB)
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What is the source of your information in the PPT?
Thanks for sharing the presentation.
What are your views on the New Energy Business?
The way I am thinking about this is:
- It will call for significant amount of CAPEX, in fact, this business will demand CAPEX much more than legacy business.
- This business does not seem to be margin accretive, I gather that margins will be lower than legacy business.
- At some point they will have to take on debt.
- Scaling up Li-ion cells have been a challenge with many giants, Amara Raja would be no exception I believe.
- Raw materials sourcing could also be potentially challenging given the relations with China who is controlling much of the raw materials.
Based on these thoughts, I feel long term profitability is going to be challenging. Will appreciate your views.
Thank you!
Ketan
Disc: tracking
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Be careful about the companies investing huge amount of money focusing on Electrical Vehicles growth.
This might be a boomerang for these companies if EV trend dies away instead of growth -
Read few articles -These articles are gives sense of unsustainable EV future growth due to safety issues and economics-
(1) https://www.cnbc.com/2023/10/25/gm-honda-scrap-plans-to-co-develop-affordable-sub-30000-evs.html
(2) Disaster for EV drivers as their cars risk becoming 'uninsurable'
Next growth will be Hydrogen based instead of EV. Hydrogen based trend will be more sustainable. Indian government are focusing more on green hydrogen.
https://innovation-village.com/gm-and-honda-partner-to-begin-mass-production-of-hydrogen-fuel-cells-for-diverse-applications/
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