Battery manufacturers play an important role in the transition from combustion engine cars to electric vehicles. While EV makers appear to be fleshing out their EV portfolio with new launches, battery makers would indirectly have the most potential ahead of this transition.
These companies have fallen on hard times for more than 2.5 years. For example, the two major publicly listed players Amara Raja Batteries Ltd (NS:) and Exide Industries (NS:) have fallen more than 57% and 40% from their respective highs in January and February 2021 to a low of 52 weeks, marked in June. This year. This correction appears to be complete in both counters as both have reversed this downtrend with consistent rallies from the bottom.
Amara Raja Batteries is a company that is on investors’ radar. In FY22, the company recorded a net revenue of INR 8,775.13 crore, which is not only an impressive increase of 21.25% from revenue of 7,237, INR 14 crore from the previous year but also the highest ever recorded by the company. However, net profit fell by 20.76% on an annual basis to INR 512.57 crore, mainly due to an 8.4% drop in EBITDA.
Image description: Amara Raja Battery daily chart with volume bars at the bottom
Image source: Investing.com
Although the stock has been steadily rising over the past few sessions, it cleared a major hurdle today with a much-needed rally of 4.4% to 532.8 INR, as of 12:12 PM IST. The sudden surge in price shows that investors are now looking to capitalize on valuations after a relentless fall over the past two years. So far, the day’s volume has been recorded at around 1.31 million shares, which is only the first 3-hour volume, but it has already become the highest single-day volume since the August 8, 2022. At the close, it could easily double. from here as well, further increasing the reliability of evasion.
On the upside, the next hurdle seems to be present around INR 580, which gives the stock potential of around 9% to 10% in the near future. On the other hand, the stock is enjoying strong support around the 500 INR levels, which might keep the stock in an uptrend until it is breached on the close. As there have been some intraday penetrations below this support, the closing criteria to undo the current uptrend looks more favorable.