(Reuters) -India’s Amara Raja Energy and Mobility reported a bigger-than-expected rise in second-quarter profit on Thursday, driven by increased demand from automotive manufacturers following India’s tax reforms.
The company, which makes Amaron-branded car batteries, reported profit rose 25.6% to 3.02 billion rupees ($34.36 million) in the quarter ended September.
Analysts, on average, expected 2.12 billion rupees, according to data compiled by LSEG.
India announced tax cuts on hundreds of consumer items in September, ranging from soaps to small cars to spur domestic demand. As a result, Indian dealers’ passenger vehicles and two-wheeler sales to customers recorded upbeat growth towards the end of the quarter.
Analysts noted that battery demand from original equipment manufacturers (OEMs) had risen following recent reductions in consumption tax.
Amara Raja, which counts top automakers, including Bajaj Auto, Hero MotoCorp, Maruti Suzuki as its clients, derives around 70% of its revenue from the automotive battery business.
The Hyderabad-based company’s revenue from operations climbed 8% to 33.88 billion rupees.
The company, which also makes industrial batteries for sectors such as telecommunications and railways, said cost of materials consumed grew 11.8% in the quarter, pushing total expenses up by 10.5% to 31.29 billion rupees.
Analysts also noted that the company was affected by higher power costs.
Rival Exide Industries is yet to report its quarterly results.
($1 = 87.8950 Indian rupees)
(Reporting by Meenakshi Maidas in Bengaluru; Editing by Janane Venkatraman)
