INSUBCONTINENT EXCLUSIVE:
MUMBAI: Amara Raja Batteries reported a good set of numbers in the September quarter amid challenging conditions with both automotive and
industry battery businesses recording healthy volume growth.
Analysts are bullish on the stock given an expected improvement in replacement
demand and a market share gain from unorganised players after the GST implementation.
The stock, which rallied 10% to ?718.30 on Monday,
currently trades at 18 times its FY20 estimated earnings as against five-year historical multiple of 28
The company is virtually debt free has been maintaining a healthy dividend payout of 18.41% The company posted an in-line small dip of 3%
year-on-year in September 2019 quarter sales, led by healthy volume growth of 10-27% in auto replacement, 12% growth in UPS that largely
offset a decline of 25% in original equipment manufacturer (OEM) segment
Operating profit margin expanded 373 bps YoY and 180 bps quarter-on-quarter to 17.2% on the back of soft lead prices and a better product
This has been driven through a combination of technological innovations, witty advertising and unique distribution model supported with
operational efficiency-led competitive pricing.
In the light of the recent tax rate cut, several analysts have revised upward FY20/21
Gandhi, re-search analyst, Motilal Oswal Financial Services
units with a capex of ?700 crore
This will help the company to expand its four-wheeler capacity by 2-2.5 million to 13.5 million and two-wheeler capacity by 3 million units
