Amara Raja’s lithium-ion pact powers the stock, but jerks likely ahead
MUMBAI : A crucial and much-awaited trigger for battery maker Amara Raja Energy & Mobility Ltd has played out—a technology tie-up for lithium-ion. Its subsidiary Amara Raja Advanced Cell Technologies entered into a technical licensing agreement with GIB EnergyX Slovakia, a subsidiary of China-based Gotion High Tech Co. The partnership will help the battery maker get access to GIB’s LFP technology for lithium-ion cell manufacturing.
This type of battery is mainly used in passenger vehicles and three-wheelers. In reaction, the Amara Raja stock zoomed 20% on Tuesday, also hitting a new 52-week high of ₹1,656.05. Amara Raja is looking to develop a gigafactory and eyeing 16GWh capacity in 10 years.
In 2023, Amara Raja announced an investment outlay of ₹9,500 crore to establish the Amara Raja Giga Corridor in the state of Telangana. The Street is excited as this deal could accelerate the process of meeting the target. Amara Raja’s core business is manufacturing lead-acid batteries, but the industry is gradually transitioning to lithium-ion batteries.
Hence, it is investing in building lithium-ion capacities to meet demand, mainly from electric vehicles. Amara Raja has started assembling and supplying lithium battery packs and manufacturing chargers to customers in two-wheeler, three-wheeler and industrial segments. It has a small lithium-ion cell manufacturing facility with 2GWh capacity.
This was built with an investment of ₹1,500 crore and is likely to come on stream in 2025-26. In this backdrop, the GIB deal is a step in the right direction. Remember that, Exide Energy Solutions has partnered with SVOLT to build its own lithium-ion battery plant, which is expected to begin operations in 2024-25.
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