Battery makers are an important part of fueling the transitioning of combustion engine-based cars to electric vehicles. While EV manufacturers seem to be ramping up their EV portfolio with new launches, battery makers would indirectly be having the biggest potential ahead of this transition.
These companies have had a rough time for more than 2.5 years. For instance, the two major listed players Amara Raja Batteries Ltd (NS:) and Exide Industries (NS:) have fallen over 57% and 40% from their respective highs in January and February 2021 to a 52-week low, marked in June this year. This correction seems to be over in both the counters as both have reversed this downtrend with consistent rallies since the bottom.
Amara Raja Batteries is one company that is coming on investors’ radar. In FY22, the company recorded net revenue of INR 8,775.13 crores, which was not just an impressive 21.25% increase over the previous year’s revenue of INR 7,237.14 crores, but also the highest ever for the company. However, the net income fell 20.76% on a YoY basis to INR 512.57 crores, primarily due to an 8.4% hit to EBITDA.
Image Description: Daily chart of Amara Raja Batteries with volume bars at the bottom
Image Source: Investing.com
Although the stock had gradually been moving higher over the last many sessions, today it surged passed a major hurdle on the back of a much-needed 4.4% rally to INR 532.8, by 12:12 PM IST. The sudden spurt in the price depicts investors are now looking to capitalize on the valuations after a relentless fall in the last couple of years. The volume for the day so far has been recorded at around 1.31 million shares, which is the volume for the first 3 hours only but it has already become the highest one-day volume since 8 August 2022. By the closing, it could easily double from here as well, further increasing the reliability of the breakout.
On the upside, the next hurdle seems to be present around INR 580, which gives the stock potential of around 9% – 10% in the near future. On the other hand, the stock has strong support around INR 500 levels which might keep the stock in an uptrend until it gets breached on a closing basis. As there have been a couple of intraday penetrations below this support, closing-basis criteria to negate the current uptrend seems more favorable.
