Amara Raja Energy and Mobility saw its shares surge by 20 percent to Rs 1,656, marking an all-time high on June 25.

This significant jump followed the announcement of a groundbreaking technical licensing agreement with China-based Gotion High-Tech.

Under this agreement, Gotion High-Tech’s subsidiary, GIB EnergyX, will license its advanced LFP (Lithium Iron Phosphate) technology for lithium-ion cells to Amara Raja Advanced Cell Technologies Pvt Ltd (ARACT).

Since the beginning of the year, Amara Raja's shares have shown remarkable growth, rallying over 100 percent.

The latest licensing deal is expected to bolster Amara Raja's position in the battery technology market, particularly in the development of their gigafactory, aimed at achieving a 16 GWh capacity.

In response to the deal, several brokerages have provided their insights. JPMorgan has issued a neutral rating on Amara Raja, setting a target price of Rs 1,210 per share.

They noted that while the technical licensing agreement with Gotion is a positive development, further details are necessary to reassess the stock's valuation.

JPMorgan highlighted that this partnership would likely enhance investor confidence in Amara Raja's ambitious capacity goals.

Similarly, analysts at Investec have expressed optimism, predicting a valuation catch-up for Amara Raja following the announcement.

They emphasized that the deal with Gotion, one of the top 10 global lithium-ion cell manufacturers known for its robust backward integration and technology capabilities, is poised to significantly boost Amara Raja's cell manufacturing potential.

Financially, Amara Raja has been performing well.

In the fourth quarter ending March 31, 2024, the company reported a year-on-year (YoY) increase of 61.4 percent in net profit, reaching Rs 229.8 crore.

Revenue from operations grew by 19.5 percent, amounting to Rs 2,908 crore, compared to Rs 2,433.2 crore in the same period the previous year.

At the operational level, the company's EBITDA rose by 16.2 percent to Rs 410.4 crore, up from Rs 353.2 crore in the fourth quarter of FY23.

This licensing agreement with Gotion High-Tech is seen as a strategic move for Amara Raja, positioning the company to leverage cutting-edge technology in the highly competitive lithium-ion battery market.

As the details of the collaboration unfold, the market will closely watch how this partnership translates into tangible growth and operational efficiencies for Amara Raja