Small & Midcap Mantra | This underperformer from the auto space can zoom up to 80% in 6 months

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26 Aug, 2025 12:21

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The stock of Amara Raja Batteries was a clear underperformer in last one year gaining just about 11 percent as compared to an over 50 percent rally in the Nifty50 index in the same period.

On a year-to-date basis as well, Amara Raja has underperformed the benchmark index, with the former falling about 19 percent as compared to an over 12 percent rally in Nifty and 15 percent surge in the BSE 200 index.

But, what to expect going ahead?

Amara Raja Batteries, with a market-capitalisation of more than Rs 12,000 crore, is poised for a stellar rally that could take the stock above its 52-week high of Rs 1,025 in the next 6 months, feel experts.

With the long-term moving average sloping upwards, the next logical target for the stock is placed at Rs 1,115-1,350 which translates into an upside of 50-80% from the June 18 closing price of Rs 748 on the BSE, suggest experts. A stop-loss can be placed at Rs 630.

Amara Raja Batteries (ARBL), the flagship company of the Amara Raja Group, is the technology leader and is one of the largest manufacturers of lead-acid batteries for both industrial and automotive applications in the Indian storage battery industry.

The company's Industrial and Automotive batteries are exported to 32 countries across the globe. Earlier in June, the management announced energy and mobility as its strategic focus going forward to capitalise on emerging opportunities.

Auto ancillary space, in general, has remained upbeat so far this year as the sector heavyweights are either around their record high or are at 52-week high.

Battery manufacturers have underperformed their auto ancillary peers in the last 6 months amidst profit booking at higher levels and are on the verge of a turnaround.

“Upbeat outlook on auto as well as auto ancillary sector suggests that battery manufactures will soon jump on the bandwagon, where Amara Raja Batteries provides better risk-reward,” Jatin Gohil, Technical and Derivative Research Analyst Reliance Securities said.

“The stock retraced 38.2% of prior up-move (Rs348.55-964.80) after profit booking. Breaching its prior monthly falling trend, the stock rose by 4% so far this month,” he said.

Gohil further added that the cumulative open interest of the stock futures rose to a record high, which signals major participants are in favour of the bulls. Long-term moving averages are sloping upwards.

Its momentum indicator and oscillator reversed after testing their oversold zone on the medium-term timeframe chart and are positively poised.

“The momentum could take the stock towards Rs1,115 initially and Rs1,350 subsequently, which coincides with its 61.8% and 100% Fibonacci Extension levels of prior up-move, respectively. In case of major decline, the stock will find support at around its extended downward slopping upper band, which is placed at around Rs630,” recommends Gohil.