Costs outpaced sales growth, pushing Q2 operating margin to 8.80%
Revenue rose +18.51% YoY, but a -84.90% drop in other income and higher costs drove net profit down -44.85%.
Filed 02 Nov 2026, 18:37 IST · after market close · Amara Raja Energy & Mobility Ltd (ARE&M)
Key takeaways
- Consolidated revenue grew +18.51% YoY, but expenses rose +21.16%, reducing operating margin by 2.00 percentage points.
- Net profit fell -44.85% YoY as other income dropped -84.90% and the tax rate rose 2.67 percentage points.
- Operating margin fell to 8.80%, 3.94 percentage points below the 149-peer Consumer Discretionary median.
Price around the results
Revenue growth did not translate into profit growth
On a consolidated basis, revenue grew +18.51% YoY, but profit before tax fell -42.84% and net profit declined -44.85%. Other income fell -84.90% YoY and accounted for 10.85% of pre-tax profit this quarter, making the earnings comparison less supportive than the revenue growth suggests. Sequentially, revenue fell -2.51% and net profit fell -20.14%.
Higher costs and financing charges squeezed margins
Expenses grew +21.16% YoY against revenue growth of +18.51%, narrowing operating margin by 2.00 percentage points. Sequentially, revenue declined -2.51% while expenses fell only -1.61%, reducing operating margin by another 0.83 percentage points. Interest expense rose +63.44% YoY and +23.41% QoQ, while the tax rate increased 2.67 percentage points YoY and 1.87 percentage points QoQ.
Margin has declined for a second straight quarter
Operating margin moved from 10.90% in Q4FY26 to 9.63% in Q1FY27 and 8.80% in Q2FY27. It was 3.94 percentage points below the 12.74% median among 149 Consumer Discretionary peers that had reported the quarter.
Management outlined expansion across cells, packs and storage
Management said OEM volumes in both four-wheelers and two-wheelers sustained double-digit growth, while Industrial UPS growth was supported by data-centre demand. The company said its board approved a 5 GWh LFP cell factory and that it plans to raise pack assembly capacity from 4 GWh to 9 GWh. Management also said it targets 16 GWh of lithium cell capacity by FY2030 and plans a 10 GWh BESS facility for commercial, industrial and grid applications.
No market reaction yet; prior responses were mostly negative
The results were filed after market close, so no post-results share-price move is covered here. Across eight prior result reactions, the stock fell six times, with a median absolute move of 3.98%.
Q2FY27 at a glance
Consolidated figures as filed with NSE — filed ahead of third-party databases, not yet independently cross-checked.
| Line item | Q2FY27 | Q1FY27 | QoQ | YoY |
|---|---|---|---|---|
| Revenue | ₹4,109 cr | ₹4,215 cr | -2.51% | +18.51% |
| Other income | ₹23 cr | ₹20 cr | +16.00% | -84.90% |
| Expenses | ₹3,747 cr | ₹3,809 cr | -1.61% | +21.16% |
| Operating profit | ₹362 cr | ₹406 cr | -10.92% | -3.40% |
| Operating margin (%) | 8.80% | 9.63% | — | — |
| Interest | ₹15 cr | ₹12 cr | +23.41% | +63.44% |
| Depreciation | ₹161 cr | ₹159 cr | +1.33% | +7.08% |
| Profit before tax | ₹209 cr | ₹255 cr | -18.11% | -42.84% |
| Tax | ₹56 cr | ₹64 cr | -12.01% | -36.56% |
| Net profit | ₹152 cr | ₹191 cr | -20.14% | -44.85% |
| EPS (₹) | ₹8.33 | ₹10.43 | -20.13% | -44.87% |
Operating margin of 8.80% compares with a Consumer Discretionary sector median of 12.74% across 149 peers that have reported Q2FY27.
What management said
From the company’s own investor presentation. Each point is checked against the source document before it appears here.
This quarter
- OEM volumes in both four-wheelers and two-wheelers sustained double-digit growth during the quarter.
- Industrial UPS registered steady growth rates driven by demand from data centres.
Guidance & outlook
- The company targets 16 GWh of lithium cell capacity by FY2030.
- The company plans to scale its pack business by entering new mobility applications and building a sustainable customer base.
- The company plans a 10 GWh BESS facility to serve commercial, industrial and grid applications.
- The company is committed to achieving net zero by 2050.
Expansion
- The board approved setting up a 5 GWh cell giga factory based on LFP chemistry.
- The company plans to increase pack assembly capacity from 4 GWh to 9 GWh.
- The company plans a 10 GWh BESS giga facility for energy storage solutions.
New products
- The company expanded into lubricants with the Amaron Hi-life Lubes offering.
New initiatives
- The E+Ve Lab was commissioned in October 2026 to support technological advancements in the new energy business.
- The company launched Amaron Assist, a direct-to-consumer automotive service platform.
Problems & risks
- Exports continue to face headwinds because of geopolitical uncertainty.
What to watch
- Whether operating margin stabilises above 8.80% after two consecutive quarterly declines.
- Whether interest-expense growth moderates from +63.44% YoY.
- Whether other income remains a material contributor after accounting for 10.85% of Q2FY27 pre-tax profit.