Amara Raja Energy & Mobility Ltd (NSE: ARE&M) Q3 2026 Earnings Call dated Feb. 12, 2026
Corporate Participants:
Y. Delli Babu — Chief Financial Officer
Swajitha Rapeti — Head of Corporate Finance:
Analysts:
Unidentified Participant
Krupashankar — Analyst
Raghunandhan NL — Analyst
Kapil Singh — Analyst
Joseph George — Analyst
Mumuksh Mandlesha — Analyst
Vaishnavi Gurung — Analyst
Aniket Madhwani — Analyst
Presentation:
operator
Ladies and gentlemen, good day. Welcome to Amara Raja Q3FY26 earning conference call hosted by Avendus Park. As a reminder, all the participants live will be in the listen only mode. There will be an opportunity for you to ask a question after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing Star then zero on your touchstone phone. Please note that this conference is being recorded. Now I hand over a conference call to Mr. Krupa Shankar from Avendus Park. Thank you. And over to you sir.
Krupashankar — Analyst
Thank you, Manasa. Good evening everyone. Krupa Shankar here from Evidence Park. Appreciate everybody logging in to the 3Q FY26 earnings call of Amaraja Energy and Mobility Directive from the management team. I’m pleased to host Mr. Vai Delhi Babu, Chief Financial Officer and Ms. Swajitha Rapiti Head Corporate Finance. I’ll now hand over the call to the management for opening remarks. Over to you, ma’. Am.
Swajitha Rapeti — Head of Corporate Finance:
Yeah. Good evening everyone. Thanks for joining the call during Q3. The total consolidated revenue today at 3410 crores and which is a growth of around 4.2% over the previous year and 93% of the revenue has come from lead acid business and rest has come from new energy business. During the quarter, steady growth of 7% in domestic automotive four wheeler volumes along with other applications supported the top line expansion. In the lead acid business, four wheeler OEM volumes have demonstrated robust growth of around 25% and aftermarket volumes grew around 3% on yoy basis. Other applications including tubular batteries and HUPS also demonstrated a growth rate of around 10%.
This quarter marked a significant increase in the tubular battery sales from in house manufacturing unlike the previous years and loops also continued to clock a quarterly revenue of around 50 crores maintaining its growth momentum. Coming to the lead asset industrial side, the industrial volumes excluding the telecom volumes registered a growth of around 2% and the UPS volumes had grown by around 5% on YoY basis during the quarter. Despite these growth numbers highlighted earlier, the lead asset business reported a muted top line of around 3174 crore during the quarter. This was primarily driven by the decline in industrial telecom lead asset volumes and decline in automotive export volumes around 15%.
On account of tariff issues and other geopolitical uncertainties. On the new energy business during Q3 we have delivered a strong performance with a revenue of more than 200 crores which is a growth of almost two times compared to the previous year. This marks the first quarter in which we crossed the 200 crore revenue milestone and this growth is supported by increased demand for telecom packs. During the quarter we supplied telecom packs around 250 megawatt hours and this led to a stationary capacity utilization of 80% less. Besides telecom pack, we are also now shifting focus to battery energy storage solutions where the market demand is expected to reach around to 25-30 GWh by FA31.
Our board has approved to set up a 5 GWh integrated solution plant with an estimated CAPEX outlay of around 280 crores to cater to both grid and commercial industry energy storage solutions. We expect this plan to be operational by end of FY27. During Q3 we infused around 200 crores into MRAJ Advanced Cell Technologies which is a Lithium subsidiary and with this the total Investment is now 1400 crores. With respect to the profitability, the standalone operating margin stood around 11.2%. If we adjust for the lithium telecom battery trading business and consider even the operational efficiency from our lead recycling plant, the margins would go up to 12.3%.
During Q3, our lead recycling plan led to a margin accretion of around 0.6% at EBITDA level during the quarter. At a lab level. At a lead acid battery business we are able to sustain the operating margins of about 12% despite these cost pressures at raw material levels. The raw material cost particularly in tin alloys and sulfuric acid and even antimoney alloys increased materially during the quarter which impacted the margins. In addition to this, even the OEM mix being higher during the quarter and and some provisions around warranty expenses. EPR liability also added to the moderation margin expansion.
We took a price increase of around 2% in January month in January 26th to mitigate this price and cost pressures. On the CAPEX side till YTT December we have spent around 950 crores between lead acid business and new energy business and out of which 600 crores has been spent towards lead acid and 300 crores towards new energy business. So this is a quick brief on the Q3 performance. We can go ahead with the question answers.
Questions and Answers:
operator
Thank you very much. Now we begin the question and answer session. Anyone who wish to ask a question may press STAR and one on your touchtone telephone. If you wish to remove yourself from the question queue you may press STAR and two participants are requested to use the headset while asking the questions. The first question is from the line of Raghunandan from November Institution Equities. Please go ahead.
Raghunandhan NL
Thank you very much for the Opening remarks and thanks for taking my question. My first question was to better understand on the volume side can you please indicate within four wheeler how was the growth in OEM replacement and export.
Swajitha Rapeti
In. The four wheeler segment, the automat on the OEM side we have grown around 25%. In the aftermarket segment we have grown around 3%.
Raghunandhan NL
Got it. And how would be exports?
Swajitha Rapeti
The exports there was a decline and during the quarter around 15% on account of all the stariff issues.
Raghunandhan NL
And can you also indicate for two wheeler how is the OEM and replacement.
Swajitha Rapeti
With respect to the two wheeler segment? Both on the aftermarket and OEM segment the growth has been pretty flat. We have grown marginally around 1%. This is primarily due to the previous period. In the corresponding period the volumes were slightly on a higher side, the base was a bit on a higher side because of which the growth looks muted. And on the OEM side the growth was bit muted because certain OEM factories were slightly shut down for a couple of months which resulted overall flat growth in the revenue.
Y. Delli Babu
The two wheeler. Raghunandan Just to add to what Sajitha has said, last year, same quarter, if you compare the yaway growth it was almost 17%. So there was that higher base impact that kind of has shown a muted growth on the two year aftermarket but I am sure it will kind of revive itself in the coming quarters. And OEMs we have seen in some of the platforms that we are supplying, we have seen couple of areas, there was some bit of stoppage of lines for their maintenance, etc. But otherwise in terms of market share there is no major change between Both Aftermarket and OEMs as well.
Raghunandhan NL
Good to hear that sir. And on the industrial side ups is plus 5%. How much would be the decline in telecom and what would be the share of telecom now in overall revenues? Is it very small? Because there has been a shift away from lead asset to lithium. So what would be the lead asset? Telecom share now.
Swajitha Rapeti
The telecom during the quarter the volumes have declined by more than 45%. Raman so if you see compared to the previous quarters the overall telecom share in the revenue has come down significantly. I think if you see now that share would be less than 5% as a percentage of the overall revenue because of the transition to the lithium.
Raghunandhan NL
Thank you, thank you for that. And lastly just to complete the volume bit, the home inverter how would be the growth there.
Swajitha Rapeti
The home inverters it grown around 10% on a VAR business.
Raghunandhan NL
Got it, got it. This is very helpful. Secondly in terms of the under Recoveries with the 2% price hike taken in January. So would that mean that all the cost related pressures are covered or would further price increases be required based on the current commodity prices?
Y. Delli Babu
Raghu, there is a bit of an uptick again after we took this price increase in the month of. In the beginning in the first week of January. While it can cover some portion of the ally side of it that the other raw material cost like acid is again hitting us. But nevertheless in Q4 if the season for the tubular batteries were to go in the expected lines then that could because of increase in the manufacturing revenue that could mitigate some bit of margin pressure. But at this point of time, if the asset prices also were to cool down during this quarter I think that should help us.
But right now we believe to the extent of alloy price increase what we have seen this would be sufficient. But we had to wait and see how are the other factors how will the balance of the quarter will move on? Because lead was also kind of reached 1900 and again it has moved back to 1930 levels as we speak. So we have to wait and see how the balance of the quarter operates.
Raghunandhan NL
Got it sir, very helpful. And on a full year basis would let asset capex be around 700 crore or would it be higher?
Swajitha Rapeti
On a full year basis it can go up to 750 crores in this financial year.
Raghunandhan NL
Got it. Secondly until 800 crore. Thank you. And secondly.
Y. Delli Babu
Yeah. On the capex Raghu, that could be even including the tubular plant reinstatement part of that money is going to come from the insurance thing.
Raghunandhan NL
Yeah, got it sir. So for next year FY27 it should normalize to about 400500 crore.
Swajitha Rapeti
Yes. Yes. In terms of the lead acid battery I think it will be around 300 to 400 crores. Whereas on the new energy side we may spend around 1000 crores in the next year.
Raghunandhan NL
Thank you ma’. Am. And on the CEN capacity side with the expansion which you indicated 280 crore investment on the best opportunity. If you can talk about the opportunity whether how are you approaching to get orders? How do you see the scale up revenue potential? Something on the economics. Any details you can share will be very helpful.
Y. Delli Babu
Raghu, initially our idea is as Sajitha has mentioned we expect the overall market size to grow to about 30 gigawatt hour in the next four to five years. And you know there are a lot of tenders that have come up and then people have participated in big number. And going forward the storage requirements Both because of the round the clock power requirement from the solar generation side as well as the intermittency in the solar power generation is also required to be mitigated with appropriate storage. So we are focusing on the battery energy storage on two major applications.
One is at the commercial and industrial level which are of smaller size solutions, whereas at the grid level it will be a containerized solution with lithium batteries plus the other DC block that will come in. So depending on where the lithium pack levels are and depending on what size of the container that is being required, the per kilowatt hour prices will vary significantly. So it is difficult to put a particular unit economics at this point of time. The other characteristic of this business is it kind of mimics the packed business because obviously you’ll be importing a lot of content to start with.
And over a period of time there is a push also because the government also has stipulated certain percentages of best solutions that need to be produced within the country. And there is also the support for domestic content inclusion. You know what has happened in solar where government has mandated certain government, there is a domestic content being used in the solution. So that way I think the business demand is high and its asset turnover ratios are expected to be also very high. Because turnover ratios could be anywhere around nine to 10 times because of this being more of a solution architecture being provided by Amaraja.
Whereas components will be imported to start with and over a period of time it also paves the way for localizing the other components, particularly the cells. The cells used in Bess are the rating of about 314 Ah today I think once we see that there is a robust demand that’s evolving on that and it will also pave way for us to go back and then make the cells as well. So from a percentage operating margin level it will be low. But from an ROCE level I think it should be better as we move into this business.
Yeah.
Raghunandhan NL
Thank you so much sir. I’ll fall back to the queue.
operator
Thank you. From the next question we have Kapil Singh from Namora. Please go ahead.
Kapil Singh
Yeah, good evening sir. My question is just following up on this, wanted to understand how you are thinking about competitive advantages in this business, how you are building competencies there. Because from what I understand there will also be fairly high competition given, you know, everybody will be importing for initially for this. So is that understanding correct? And second is from cells point of view, are our existing facilities capable of producing those cells or we need to do additional CAPEX to make those cells which Chemistry is used here.
Y. Delli Babu
Kapil as well as competition is concerned. I request you to note what has happened in telecom. I mean you know when we started the whole telecom packs business there were too many number of players who have got into that business. And then how over a period of time again today if we look at on a combined lead acid and lithium basis, we still hold about 55 to 60% of the market with us. While we definitely agree that unlike lead acid, lithium is not going to is not a geopoly market particularly on the PAC side today.
But over a period of time when we actually see any of these businesses, when the entry barriers are low, there will be too many, too much competition. But over a period of time we have definitely realized that there is value that will be provided by larger players who understand the whole power requirements better. And secondly, as you also know, Amaraja Group is also into EPC business of solar generating stations. They do a lot of work for it and it augurs also well for us because we’ll be able to participate in many of these private tenders as well and then supply the solution.
And moreover, if we look at the 3040 GWh kind of a demand for the capacity that we are looking at scaling up to about 5 gigawatt hour will result in approximately about 15% of the market share. So that I think is a rightful market share for us to really think about. And I don’t see that should actually become a serious syndromes as far as the cells are concerned. This will be an LFP cell. Current cells that are getting used are 300 Ah, kind of a rating. And over a period of time, once we establish our LFP chemistry cells factories, I think one of those lines or one of those factories can actually be the storage side of it.
As you know, even in the overall lithium numbers we expect that at least 30 to 35% of the overall lithium cell demand will be from the storage side. Whether it could be telecom or UPS or pess, et cetera. So that way whatever the rating of cells that are relevant for the bess have to be developed over a period of time. Obviously there is a time to decide what cell size and what capacity that we need to put up.
Kapil Singh
Sure. So that’s, that’s very helpful. Thanks for the detailed answer there. Secondly, on the NMC sales capacity that is coming up this year, how are you sensing the potential to utilize that? You know, some of the players even in the two wheeler space have talked about using LFC also as a technology going ahead and then we are also seeing some new technologies like sodium also being explored. So just your thoughts on how you are, you know, working on new technologies, what are your thoughts in terms of some of these new technologies as well? And then the utilization of NMC facilities.
Y. Delli Babu
See, we definitely hear you. I think that’s the same thing. What we also hear you not only from two wheeler customers, even some of three wheeler customers as well to whom we are currently supplying packs, but even then we believe that the capacity, as you know, even in the earlier calls that we have clearly said that it’s not going to be more than 2 gigawatt hours for any this thing. So not only the mobility application, there could be certain high power cells that could be required even in segments like power tools, etc. So there will not be a problem as far as using this even by today’s understanding of the market.
But in the worst case, obviously future nobody is so certain about in the worst case, if at all there is a problem with it. As we have explained earlier. Also migrating this whole line to LFP chemistry is not going to be from a capital point of view, very taxing. So if NMC chemistry is going to be completely relevant, there will be certain, at least in the, even in the export markets there could be some demand that will definitely be there for lmc. So we don’t see a problem of utilization of the capacity at this point of time.
As far as new chemistries that are evolving, that obviously is a very important point for us and there is a very dedicated team which is looking into the feasibility of those chemistries as and when they become relevant. We will definitely work on them and then see what kind of adaptation that we need to do for the Indian market. Beyond this I’m, I will not be able to give you any specific detailing as to at what stage we are with respect to these technologies. But yes, as we know, sodium ion is being talked about and we also understand that LFP chemistry is the mainstay chemistry for mobility applications.
Which is what we have been saying for the last ever since we have started this pivot to a new energy business.
Kapil Singh
Okay, great. And sir, lastly, just on the overall growth, you know, it was a little soft this quarter, so if you could just share your thoughts on the growth for the different segments as we look ahead are, you know, particularly a little surprising to see aftermarket growth and four wheelers of only 3%. So what, what’s happening really over there? And similarly telecom as well, very sharp decline. So is this cyclical decline you think or what’s happening there. And same for exports actually because you know tariffs were particularly for the US market. So is where is this impact in which markets you have seen the tariff impact?
Y. Delli Babu
The two reasons as far as exports are concerned. Because last year, you know, we have commenced the supplies and obviously last year’s volumes have that advantage. They already built into them. But now this year we are not able to supply any volume in this quarter to the US markets. And also some of the capacities, for example in the Middle east and Asia, Asia Pacific market where we are strong, we are seeing the competitive intensity also bit of on raise. So that there is natural drop in the volumes in those markets as well. Because there is too much of competition that we need to withstand.
So that will I think, I mean we are also now trying to look at what are the possible mitigations of it. Because America being such a large market, we cannot ignore it for continuously. And then we also need to understand how do we withstand these challenges from time to time based on the political or other reasons. Whenever there is a challenge with respect to the tariffs or other non tariff barriers, we need to figure out how to overcome them so that there is that stability in the total business. So there are certain steps that we are taking in that regard, which is where we are trying to now look at.
To form a small subsidiary to start with and then see how it can help stabilize and then improve our business in US. That’s something that we are working on. But I think we are also seeing with whatever announcements that are coming on the trade side, we are hopeful that in the coming quarters it should kind of smoothen out and then because while it was told that the 232 section will also be reviewed and there will be announcement regarding it, but we are still waiting for the final details around it. So as and when that becomes a reality, I am sure we should be able to overcome that.
Now as far as the domestic market is concerned this quarter, particularly if you see both on the four wheeler and two wheeler last year, same quarter the aftermarket growth was pretty high. So there is that base impact that is creating some bit of an issue. But overall aftermarket battery growth also is as you know, the industry is only growing at about 5 to 6% kind of numbers. So in the coming quarters these one off quarter volume blips will get definitely corrected as we move into the next years. So at the industry growth rate level, I don’t think there is a reason for us to reassess or get worried about this 5 to 6% number.
I think they still have that kind of a potential to grow.
Kapil Singh
On the telecom side as well.
Y. Delli Babu
Yeah, sorry. On telecom there is no loss of market share as I have explained some time ago, because though there is chemistry migration happening to lithium lead acid volumes are obviously going down. So the capacity is also getting retired to that extent because it is not going to be relevant anymore. Only right now meager volumes are being supplied and we know that this journey, this is how it is going to happen. And in the next two to three years, if the lithium prices were to sustain at the same levels and there is no abnormal increase, then naturally you will see that the overall telecom lead acid volumes will continue to degrow and we may see a situation where you may not really need to operate a lead acid capacity around lithium.
And as such now it has become a very small portion of our overall business.
Kapil Singh
Thank you so much sir for the detailed answer and best wishes.
Y. Delli Babu
Thanks.
operator
Thank you. The next question is from the line of Joseph George from iifl. Please go ahead.
Joseph George
Hi. Thank you. Just one question. When I look at this industry, it’s a duopoly and when I look at pre Covid, the blended margins of the two companies used to be approximately 4 to 10% and now we have reached a stage where the industry margin is at about 11% or so. Given that, given that GST card batteries as a consumer category have become more affordable, do you think the industry will display enough pricing power to get back to the old margin range?
Y. Delli Babu
See, I think when we say old margin range, obviously you need to adjust for the lead base because it would be difficult if we encourage that we will. I mean for a continuous, even at such a large lead base, if you continue to target huge margins in the range of let’s say 16, 17%, then obviously you are inviting competition from elsewhere, which is what both. I mean the industry was able to successfully award so far. So naturally you need to balance that part also when we take certain pricing decisions. But nevertheless, the current cost headwind, what we are seeing, particularly on the metal side, I mean the industry is taking its steps to really recover whatever that is possible to be recovered.
And there is also, even on the large B2B customers, also there are those discussions trying to see how do we get this cost recovered from the market. So I think over a period of time there will certainly be a margin improvement. But what level is something that I don’t think while from a company point of view our target is clearly to move back to at least a 13 to 14% range, but from an industry point of view. Obviously that’s not right thing for me to comment on. That’s how I look at it.
Joseph George
Sure. Sir, just one question on the OE segment. So do you have automatic pass through for lead price for OE contracts or is that subject to negotiations?
Y. Delli Babu
Yes it is automatic pass through based on the PVC contract that we have. But that’s only for the led, not for all commodities.
Joseph George
Understood. Thank you. That’s all I have.
operator
Thank you. The next question is from the line of Mumuksh Mandalisha Anandrati Institutional Equities. Please go ahead.
Mumuksh Mandlesha
Yeah, thank you sir for the opportunity. Opportunity sir so you mentioned about 9 to 10x is a set, an opportunity. So for the 2.8 billion capex. I mean is it the this 5 gigawatt kind of opportunity? Something like a 2 to 3 billion kind of. I mean 20 to 30 billion kind of revenue opportunities.
Y. Delli Babu
See 280 crores should give or take you about 2,800, 2,700 crores kind of a revenue assuming the current sell prices. Obviously if sell prices change even that will change.
Mumuksh Mandlesha
Got it, got it. And just want to understand I mean as of now in orders there in place and over next few years, I mean what kind of ramp up do you see for this utilizations for this new capacity?
Y. Delli Babu
As you know it will be. It will be a slow ramp up. As you know currently there is hardly a so far if you look at the supplies it will not cross even a gigawatt hour. But there are multiple tenders that are being floated and there are requirements evolving thick and fast because our own country solar capacity target itself is about 500 gigawatt hours. So naturally in the long term this will be a larger play that will come into picture. And there is a good reason for us to be in this segment because it not only helps the solution business, it also helps the eventual cell manufacturing side as well.
Mumuksh Mandlesha
Got it. So so on the you mentioned about as a solution. So along with the battery packs, so what goes along with that? Sir.
Y. Delli Babu
There are other DC blocks which basically act as inverters etc. Well I cannot give you a technical description of it. There are other electronic components that will go into it which also currently are getting imported. But over a period of time there is a both the policy push as well as possibilities of localizing them internally.
Mumuksh Mandlesha
Got it. And this 280 crore will be spent in next one year.
Y. Delli Babu
Yeah, it will be most likely we’ll complete this by end of next financial year.
Mumuksh Mandlesha
Got it. So sir, on the this quarter gross margin movement sequentially we have seen a contraction. Is it largely due to the increase in alloy prices or any other factors for this decline in gross margin?
Y. Delli Babu
Yeah, majorly. Around the material and the mix. While there are certain other expenses that we are continuing to provide for. But also as you know, the tubular factory also has kind of commenced its operation last quarter. So there is some bit of initial ramp up admin cost and employee cost also hitting our P and L. But major materially it is around the raw material cost which is actually impacting it.
Mumuksh Mandlesha
Got it sir. Thank you sir for the opportunity.
operator
Thank you. From the next line is from the name of Vaishnavi Gurung from Craving Alpha Wealth Fund. Please go ahead.
Vaishnavi Gurung
Thank you for taking. Hello. Am I audible?
Y. Delli Babu
Yes.
Vaishnavi Gurung
Yeah, thank you for taking my question, sir. I wanted to understand our growth in the lithium ion, especially the telecom side. I wanted to understand can we grow as we did in the next segment? And also one more question. Are we trading and not manufacturing in this segment?
Y. Delli Babu
Yeah. And the telecom packs, currently we are trading them because we buy the cells and then we convert them into pack pack. Manufacturing is what we do and then we sell it. From a growth point of view, it depends on the speed of migration from LED acid to lithium by all the telecom players that they are looking at. And as you know, recently the lithium prices are also hardening. So how that will change the unit economics for them is something to be seen. But by and large we believe this migration of chemistry is something that it is going to.
It is here to stay.
Vaishnavi Gurung
We do expect good growth from this segment.
Y. Delli Babu
As I said, that will depend on the migration plans of how much, how many sites they want to migrate in a given year and what kind of chemistry change that the cell players are the telecom tower players are expecting. But we expect that the telecom volumes, whenever this migration happens, lead acid will come down and lithium will to that extent increase.
Vaishnavi Gurung
I wanted to understand what is our current market share in the telecom market.
Y. Delli Babu
As I said, both lead and lithium put together we are at about 55%.
Vaishnavi Gurung
But this is heavily skewed by lead.
Y. Delli Babu
No, I think they are right now with the kind of reduction what we have seen in lead, I think in lead obviously we will be having higher market because there are only two players. From a market share point of view, LED market share will be higher. But what is important is what’s our sectoral presence with both the chemistries.
Vaishnavi Gurung
Okay, so thank you. And my second question is on ups. So are we planning to expand into lithium ion batteries? And what are your thoughts on capturing the Data center market, especially given the current demand.
Y. Delli Babu
Yeah, right now data centers are definitely having that chemistry preference towards lithium. But currently we are supplying our lead acid batteries to other segments within the UPS application. Right now the lead acid batteries are growing at about 5%. So we are also, while there is, I am not able to confirm any immediate for cell manufacturing on the UPS side, we are trying to see if there are other packs that we can work on the storage side of it. One of those steps was on the Bess side. As and when we get into any specific application on the ups, we will let you know.
Vaishnavi Gurung
So we don’t have immediate plans to manufacture both telecom and UPS batteries in hand?
Y. Delli Babu
No, when you say batteries that’s what we are doing today. It’s obviously the self part of it is something that we have to look at whether the scale that is available in India is a viable scale for us to really put up a cell manufacturing. As you know, cell manufacturing is a quite a capital intensive story. And then we need to have the required scale for us to justify that kind of an investment. So those calls will be taken at an appropriate time. But I don’t have a specific input to share you whether we will do it or not.
Obviously it is in our radar but those decisions have to be taken at an appropriate time.
Vaishnavi Gurung
Last question from my end. How are we anticipating for the margin impact from rising raw material prices?
Y. Delli Babu
Sorry, sorry, can you repeat that?
Vaishnavi Gurung
Yeah. How are we anticipating further margin impact from rising raw material prices?
Y. Delli Babu
Yeah, as I mentioned earlier in the call, we have taken some price increase during the current quarter. So that should help us mitigate some bit of this problem. But I mean we also need to see how the lead moves and in the balance period. So if all costs sustain at this level then we may have to think about if there is a need for any other additional price increase depending on how competition is behaving. But right now we are again seeing jumps in the things like acid etc. So which we will see how to mitigate as we move ahead.
Vaishnavi Gurung
Okay, thank you sir. I’ll join back with you for further questions.
operator
Thank you. Before we take our next question, we would like to remind participants you may press Star one to ask a question. The next question is from the line of Aniket Madhwani Step Trade Capital. Please go ahead.
Aniket Madhwani
Yeah, Yeah, hello. Am I audible?
operator
Yes, yes sir, we can hear you. Please go ahead.
Aniket Madhwani
Yeah, so firstly my question was on margin. So if we go to the numbers, if you compare YM Y basis there is a significant dip in Net margin. So could you just clarify on that? I know you’ve mentioned in the starting regarding the EPR liability and the OEM product. So I just want to understand in detail what exactly was the reason behind it.
Y. Delli Babu
Yeah, I think we have discussed almost 3, 4 times on the same margin question. So I don’t think I should repeat myself again and again. Clearly we have said the raw material cost and the other expenses that we have had in this quarter along with the OEM mix is the reason for this. And to compensate some of these impacts we have taken the price increase. I think we have said that. I don’t know if you would have any specific details that you want to know then maybe if you can be more specific then I’ll try to address that.
Aniket Madhwani
No, that works. It works. And I just wanted to know about the battery recycling plant. I mean is it in line with no battery braking starting from Q4?
Y. Delli Babu
Yes, yes, yes. The battery braking is going to start from Q4. And as Sajita has articulated earlier, the refining operations are providing that additional margin comfort at this point of time. But we hope after the battery braking gets into full shape, I think we should see some mitigation of the lead cost that we are currently incurring. We’ll come back to you as and when those operations are up and running as to what impact that they are making. But of course recycling operations are always kind of margin lower margin business. So we hope with the technology what we have put in place our recovery ratios will be better and then we’ll be able to improve our overall operating margins for the lead asset business.
Aniket Madhwani
Okay, got it, got it. Yeah, yeah, that’s it. Thank you.
operator
The next line is from Professional Capital. Please go ahead.
Unidentified Participant
Hello. Hello.
Y. Delli Babu
Yes.
Unidentified Participant
Yes, thank you for giving me the opportunity. I think sir, my name is Meat and last time I have also asked the one question related with the revenue. So at that time you said that we are at the 10 year highest ever revenue and that is good. But really I can appreciate. But when we are talking about growth person percentage we are just in the single digit growth. Although the last quarter government has introduced the GST rate cut in the automobile segment then we are seeing that the growth are. We can easily see the growth in the automobile, sorry car and related vehicles where they are increasing the sales but we are not reflecting.
Also we are selling our batteries but why it is not reflecting. So this is one thing. And if we are growing at the these kind of 5 to 6% sales then why our quarter on quarter EPS is not getting Visible. If we exclude exceptional item which you have taken at 230, if we exclude that then last quarter we did at 235cr for the profit profit point of view and this time we directly come at the 151 only. So sudden drastic drop at 45%. So everyone is talking about sales growth. That is good, but why we are not converting that to the EPS part? So that is my question and are we thinking like only single digit EPS growth only? We are not focusing on double digit sales growth and the profit growth.
So this is one question sir.
Y. Delli Babu
Yeah, I don’t know when did I say that we are not focusing on growth and profitability. That obviously is the focus for any company for that matter. As you know, just because there is a OEM growth in a given quarter, it will definitely not require the OEMs are growing which is why even our OEM business has grown by almost 25% this year this quarter. So for the aftermarket business to reflect whatever OEM growth that is being happening today, it will take at least three years hence. Now the second point that you asked is about the margins.
The margins. We have clearly explained why there is headwinds on the cost and what we are doing towards mitigate this as well. I have already explained in the call. In addition to this I want to add one point that we are trying to get existing without adding much of additional capex. We are trying to improve our own capacity throughput thereby without spending more money, we will be able to sell more batteries in the coming future. So from our future growth point of view, you know that we are trying to grow at least a percentage point ahead as far as good domestic market is concerned.
And we are trying our best efforts in terms of increasing our international footprint which is where we are facing certain headwinds. If our export business like we projected earlier to grow at about 10 to 15% kind of a CAGR, then obviously that will also reflect better in the overall margins. So it’s a business currently there are certain cost headwinds where we are facing and then there is a margin dilution at this point of time. And as you also understand the lead base over the last three years has kind of improved from about 1 lakh 50,000 to about 2 10,000 and even the ally prices which used to be around 160, 170 is now at about 2 20,000.
So there is a time and pace at which the industry is working on recovering these, I mean recovering from these cost headwinds. And I am sure we are in the direction of improving the overall EPS over a period of time and we have taken the decisions in line with those expectations.
Unidentified Participant
So sir, if I take follow up question on these only. So we have just reduced 2% operating margin percentage and also we are discussing about the export related. So we are mainly focusing on 88% at domestic level only. So 90% are of the domestic part only and 12% we are just exporting. So if we can not focus on the foreign export still we can do the better. And in the December 2024 you did sales 3164 crore to. Currently we are at 3351 so approximately 200 crore phase increase and expenses are also 200 crore increase. So why expenses are increasing in a similar way as a sales but it is not directly reflecting at the EPS growth.
That is actually my concern and it. Should be reflected because also.
Y. Delli Babu
Yeah. Please go ahead. Yeah
Unidentified Participant
yeah. If we take about the 10 year EPS growth then we have not done anything just 8% growth which is not able to better beat at least 1 or 2%. We are beating with the FD return. So what is the our business advantages? That is my point.
Y. Delli Babu
My request also is for you to look at the consolidated results. Because consolidated results have. They have consolidated results also have the lithium business. The expense increase. There are expenses that we are incurring towards the lithium ion business development. If you are following the company closely, we are spending close to 100 crores on the lithium ion development and other construction activities that are currently going on. The second point is your suggestion that we should not focus on exports and then only focus on domestic markets is well understood. I’ll try to see how viable that kind of a suggestion for our business context.
Because Indian as we see the Indian market growth is at a given level. Naturally for us to really look for higher growth and better profitability. Because foreign markets require AGM batteries which are a better profitable business. So that’s the reason we believe there is a reason for us to really grow internationally. But your suggestion is understood. We will rethink about it.
Unidentified Participant
Thank you. Thank you.
operator
Thank you. Participants, you may press Star one to ask a question. The next question is from the line of Vaishnavi guru from Professional from Craving Alpha Wealth Fund. Please go ahead.
Vaishnavi Gurung
Thank you for taking the question again. Sir, it is again on the telecom side you mentioned that you start manufacturing cells once you see a better demand. So since you mentioned that there has been a chemistry shift from lead to lithium which is prominent. So what is stopping us to have in house manufacturing of cells.
Y. Delli Babu
No, I have not said better demand. I have said that size because for lithium, with the capital intensity what we will have, we need to have a given scale for a given cell type. So as and when we see that there is that. And also you should understand that the lithium replacement cycle is not as fast as lead acid. So taking that into account, we need to see whether that is the right time for us. Only thing thinking about a cell only for telecom. Because if you look at the entire telecom today, if you were to convert into cell demand, it will not cross 3 gigawatt hours.
So for that capacity alone, if you put up a cell capacity and then if you were to compete with other players, also will it become a subscale? Or are you able to find a cell which is common with telecom as well as other applications? As and when we see that potential, even you should invest capital behind it. Otherwise you will be doing a subscale activity and you will not be able to be cost competitive.
operator
Thank you. As there is no further questions from the participants. Now I hand over the conference to management for a closing comments.
Y. Delli Babu
Yeah, thanks. Thanks everyone for joining the call. See you next time.
operator
On behalf of Avender Spark, that concludes this conference, thank you for joining us. You may now disconnect your lines.