May 30, 2012, 12.35 PM | Source: Moneycontrol.com
Prabhudas Lilladher is bullish on Amara Raja Batteries and has recommended accumulate rating on the stock with a target of Rs 340 in its May 29, 2012 research report.
, Prabhudas Lilladher |
“Amara Raja Batteries (AMRJ) reported 33.9% YoY growth in its top-line at Rs6.7bn in Q4FY12 (PLe: Rs6.1bn), mainly led by strong sales in the UPS segment and strong traction in the automotive replacement market. On a sequential basis, top-line improved by ~9.3%, primarily due to a strong traction in the Automotive OEM and strong aftermarket sales. Despite a better product mix, EBITDA growth at 34% YoY was in line with the top-line growth on account of higher other expenses (increased by 170bps YoY to 16.1% of Net Sales). AMRJ provided for higher warranty claims for FY12 during the quarter, thereby, resulting in flat margins YoY at 14.2%. On account of the robust top-line, EBITDA improved by 34.1% to Rs954m (PLe: Rs955m). Led by higher other income (up ~3x YoY), PAT grew by 41.8% YoY to Rs583m (PLe: Rs558m).”
“Automotive four-wheeler segment registered a volume growth of 19%, whereas the two-wheeler segment reported a growth of 26% in volumes. AMRJ has gained market share in both the segments of Telecom and UPS. Led by richer product mix in favour of the replacement market, the overall revenues for the automotive segment grew by 39% for the year. Overall, the Telecom Operators and Service Providers have shifted to one-on-one negotiations with reliable vendors as against the earlier followed norm of reverse auction mechanism, where the lowest bidder used to get the orders. At the same time, the UPS segment continues to grow at 15%+ with AMRJ increasing its market share to ~33% at the cost of the importers in the unorganised market.”
“At the CMP, the stock is trading at 10.4x its FY13E earnings and 9.1x FY14E earnings, which in our view is attractive, given the 16.3% CAGR in earnings over FY12-FY14E period. We maintain ‘Accumulate’ on the stock with a Target Price of Rs340 based on 10x FY14E EPS,” says Prabhudas Lilladher research report.
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