Sharekhan has maintained its ‘Buy’ recommendation on Amara Raja stock, raising the price target to Rs 1,967 due to expectations of strong growth in the replacement segment and the opportunity in the Li-ion cell business. Following a 20% jump in the previous session, Amara Raja shares could continue to rise as the battery maker has signed a technical license agreement with a subsidiary of Gotion to access lithium iron phosphate (LFP) technology.
This development aligns with Amara Raja’s strategy to enter the Li-ion cell manufacturing space, having sought partnerships with leading players in the industry. Sharekhan highlighted that while Amara Raja’s new energy segment currently serves the two-wheeler, three-wheeler, and telecom sectors, mastering LFP technology would ease the supply of EV battery solutions to electric passenger vehicle (PV) makers.
“Gotion is a global leader in battery solutions, and its association will help Amara Raja gain expertise in Li-ion cell technology, facilitating the setup of its Gigafactory projects,” Sharekhan noted. Recently, Amara Raja increased its stake in Norway-based InoBat to 9.32%, a company involved in the research, development, and production of EV batteries. Additionally, Amara Raja plans to invest Rs 2,000-2,200 crore in its new energy segment over the next two years.
For now, Sharekhan’s revised target price for Amara Raja suggests a 19% potential upside from Tuesday’s closing price. The successful integration of LFP technology into its operations will significantly benefit Amara Raja’s entry into the EV battery market for electric PVs. Sharekhan also mentioned that the commencement of tubular battery capacity, reduction in trading revenue, and the full benefit of the amalgamation of the plastics business will support profitability.
Read More: Click Here
