Amara Raja stock jumps 20%, hits record high on battery technology licensing deal with Chinese firm

Amara Raja shares have rallied over 100 percent since the start of the year

Amara Raja Energy and Mobility share price jumped 20 percent to Rs 1,656 to hit an all-time high on June 25 after the battery maker announced that it has entered into a technical licensing agreement with China-based Gotion High-Tech.

As part of the agreement, Gotion High-Tech’s unit GIB EnergyX will license Gotion’s LFP technology for lithium-ion cells to Amara Raja Advanced Cell Technologies Pvt Ltd (ARACT).

Following the development, a couple of brokerages have issued calls on the counter. For instance, JPMorgan has assigned neutral call on Amara Raja with a target of Rs 1,210 per share, citing the company's recent technical licensing agreement with Gotion as a positive step. The partnership is expected to accelerate the development of Amara Raja's gigafactory and instill greater confidence among investors regarding the company's ability to achieve its 16 GWh capacity target.

However, further clarity on the details of this technical collaboration is essential for a re-rating, analysts said.

Analysts at Investec expect a valuation catch-up in the company post the announcement and is likely to boost cell manufacturing capabilities. Gotion is among the top 10 global lithium-ion cell manufacturers with backward integration and technology capabilities.

In the fourth quarter ending March 31, 2024, the company reported a year-on-year (YoY) increase of 61.4 percent in net profit, amounting to Rs 229.8 crore. The company's revenue from operations grew by 19.5 percent to Rs 2,908 crore, compared to Rs 2,433.2 crore in the same period the previous year.

At the operating level, EBITDA rose by 16.2 percent to Rs 410.4 crore in the fourth quarter of this fiscal year, up from Rs 353.2 crore in the fourth quarter of FY23.