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Persistent margin pressure leads to PAT miss

• 1QFY26 standalone revenue grew ~7% YoY to INR33.5b (in line). Domestic revenue increased by 10%+, led by robust demand from OEMs in the 4W and 2W segments and healthy volumes in the aftermarket segment. In addition, its HUPS and tubular batteries business delivered a strong seasonal performance, while its allied business gained market momentum and penetration. In the industrial segment, Amara saw strong traction in UPS/data centers, with 13% growth. The new energy business was driven by healthy volumes in the stationary business.
• Gross margin stood at 29% (+120bp YoY/+270bp QoQ), likely impacted by a higher traded portion in tubular batteries in 1Q.
• EBITDA margin declined 220bp YoY to 11.5% (flat QoQ) and below our estimate of 12%. Margins are likely to have been impacted by the continued impact of higher non-lead alloy costs and higher power costs. ? As a result, EBITDA declined 10.2% YoY to INR3.9b (in line).
• However, other income came in much lower than expected at INR139m (est. INR245m).
• As a result, PAT declined 20.7% YoY to INR1.9b (below est. of INR2.1b).
• Valuation view: The stock trades at 19.3x/16.7x FY26E/FY27E EPS.

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