Amara Raja margin slips to 10.90% as costs outpace revenue
Net profit nearly doubled year on year, helped by a sharp rise in other income that made up 48.21% of pre-tax profit.
Filed 25 May 2026, 18:49 IST · after market close · Amara Raja Energy & Mobility Ltd (ARE&M)
Key takeaways
- Standalone operating margin fell 0.61 percentage points year on year to 10.90% as expenses grew faster than revenue.
- Net profit rose 93.23% year on year, but other income contributed 48.21% of pre-tax profit.
- The stock gained 0.67% on the first session after results, despite all eight recent result reactions being negative.
Price around the results
Revenue grew, but operating leverage weakened
Standalone revenue increased 16.34% year on year, while expenses rose faster at 17.14%, limiting operating-profit growth to 10.20%. The same pattern held sequentially: revenue grew 3.26% and expenses 3.58%, taking operating margin down 0.28 percentage points to 10.90%. Margin has now declined for two consecutive quarters, from 11.98% in Q2FY26 to 11.18% in Q3FY26 and 10.90% in Q4FY26.
Other income carried much of the profit increase
Net profit grew 93.23% year on year and 112.49% sequentially, but the increase was not driven only by operations. Other income was Rs 208.71 cr and accounted for 48.21% of pre-tax profit, compared with negative Rs 17.46 cr in Q3FY26 and Rs 20.02 cr a year earlier. Interest expense also increased 40.89% year on year and 53.86% sequentially, while the tax rate changed little year on year, falling 0.11 percentage points.
Margin remains below the reported peer median
Amara Raja's 10.90% operating margin was 4.06 percentage points below the 14.96% median for the 94 Consumer Discretionary peers that had reported the same quarter. The gap puts the company among the lower-margin reporters, ranked 27th from the bottom. This makes the second straight quarterly margin decline more relevant than the headline profit growth.
Management points to aftermarket demand and battery expansion
Management said lead-acid aftermarket demand is expected to remain resilient because of the large vehicle parc, while commercial-vehicle demand is expected to increase with infrastructure activity. The company said its customer qualification plant is expected to start operations in Q2-FY27 and that a 5 GWh BESS facility carries Rs 280 cr of planned capex, with production planned for Q4FY27. Management also said it plans 1.5 GWh of pack capacity at Divitipally and 1.2 GWh for stationary applications at Tirupathi.
Initial market response was unusual for this stock
The stock rose 0.67% on the first session after the results and was up 2.55% on the next session, before falling 2.76% after five sessions and 3.19% after 15 sessions. That initial gain contrasts with all eight recent result reactions being negative; the median absolute move across those reactions was 3.98%.
Q4FY26 at a glance
Standalone figures as filed with NSE — cross-checked against an independent source.
| Line item | Q4FY26 | Q3FY26 | QoQ | YoY |
|---|---|---|---|---|
| Revenue | ₹3,460 cr | ₹3,351 cr | +3.26% | +16.34% |
| Other income | ₹209 cr | ₹-17 cr | — | +942.51% |
| Expenses | ₹3,083 cr | ₹2,976 cr | +3.58% | +17.14% |
| Operating profit | ₹377 cr | ₹375 cr | +0.70% | +10.20% |
| Operating margin (%) | 10.90% | 11.18% | — | — |
| Interest | ₹13 cr | ₹9 cr | +53.86% | +40.89% |
| Depreciation | ₹140 cr | ₹141 cr | -0.92% | +8.71% |
| Profit before tax | ₹433 cr | ₹207 cr | +108.64% | +92.94% |
| Tax | ₹111 cr | ₹56 cr | +98.17% | +92.11% |
| Net profit | ₹322 cr | ₹152 cr | +112.49% | +93.23% |
| EPS (₹) | ₹17.61 | ₹8.29 | +112.42% | +93.30% |
Operating margin of 10.90% compares with a Consumer Discretionary sector median of 14.96% across 94 peers that have reported Q4FY26.
How the stock reacted
| Window | Stock | vs NIFTY |
|---|---|---|
| Results day | +0.67% | +1.16% |
| Next session | +2.55% | — |
| 5 sessions | -2.76% | -0.15% |
| 15 sessions | -3.19% | — |
| 30 sessions | -1.57% | — |
Volume on the results session was 7.01× its 20-day average.
What management said
From the company’s own investor presentation. Each point is checked against the source document before it appears here.
Guidance & outlook
- Lead-acid aftermarket demand is expected to remain resilient, supported by a large vehicle parc.
- Commercial vehicle demand is expected to increase, driven by infrastructure activity.
- Lithium-ion battery demand in India is expected to reach about 100 GWh by 2031.
- Stationary lithium-ion battery demand is projected to exceed 25 GWh annually by 2031.
Expansion
- The customer qualification plant is expected to commence operations in Q2-FY27.
- ARE&M is setting up a 5 GWh BESS facility with INR 280 crore capex and production planned for Q4 FY2027.
- The company plans 1.5 GWh of pack capacity at Divitipally and 1.2 GWh for stationary applications at Tirupathi.
New initiatives
- The company plans pilot production and product optimization to meet customer requirements.
- The customer qualification plant is intended to validate industrial-scale production and improve quality.
Competition
- The company is poised to pursue a China-plus-one strategy for global OEM and private-label supply opportunities.
What to watch
- Whether standalone operating margin recovers from 10.90% after two consecutive quarterly declines.
- Whether other income remains below the 48.21% share of pre-tax profit seen this quarter.
- Progress toward the customer qualification plant's expected Q2-FY27 start and the 5 GWh BESS facility's planned Q4FY27 production.