View Full Version : Amara Raja Batteries Ltd (NSE:AMARAJABAT) (BSE:500008)

08-19-2015, 06:06 AM
Amara Raja Batteries Limited is an India-based company, engaged in manufacturing batteries for the telecom, UPS, railways, solar and power utility sectors. The Company offers products ranging from 7.2 ampere hour to 5,000 ampere hour under multiple brands. Their Brands are Amaron Volt, which is used in Telecom, data centres, power, oil and gas sectors; Power Stack, which is used in Telecom, data centres, power, oil and gas, Indian Railways, solar sectors; Quanta, which is used in uninterruptible power supply applications, and Power Sleek, which is used in Wireless telecom, uninterruptible power supply applications. They cater to customers in telecommunication industry, railways and power industries.

Official Website: www.amararaja.co.in

08-19-2015, 06:08 AM
Results meet expectations: Amara Raja Batteries Ltd (ARBL)ís 1QFY2016 results have come in in line with our estimates. ARBL continues to outpace the market leader Exide Industries. For the quarter, ARBLís revenues, expectedly grew by 11% yoy to Rs1,145cr. Market share gains in the automotive OEM segment and robust aftermarket sales continue to boost the companyís top-line. The companyís operating margin improved by 110bp yoy to 18.2% (in line with our estimate of 18.6%) on account of soft raw material (lead) prices. Given the robust operating performance, the net profit, at Rs124cr, grew strongly by 17% yoy, meeting our expectations. Outlook and Valuation: ARBL is likely to continue gaining market share in the battery segment. The strategy followed by automotive OEMs of sourcing from multiple vendors as against having a single vendor is likely to benefit ARBL. ARBL has already received approval from new OE customers (recently got approval from Bajaj Auto, Royal Enfield and M&M) which is likely to result into increased revenues. We expect ARBL to record a healthy top-line CAGR of 21% over FY2015 to FY2017. Also given the softness in lead prices, the margins are expected to remain at elevated levels. We expect ARBL to clock 27% earnings CAGR over the next two years. However, ARBL is trading at an expensive valuation of 33.4x and 26.5x its estimated FY2016 and FY2017 earnings respectively, factoring in most of the positives. Hence, we have a Neutral rating on the stock.

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