Neutral Amara Raja; target of Rs 1030: Motilal Oswal

Motilal Oswal's research report on Amara Raja

Amara Raja’s (ARENM) 1QFY26 PAT at INR1.9b was below our estimate of INR2.1b due to lower-than-expected other income. Margins remained under pressure at 11.5% due to higher non-lead alloy costs and higher power costs. We cut our FY26/FY27 EPS estimates by 8%/2% to factor in a weaker-than expected performance in 1Q. While the market is optimistic about ARENM’s li-ion initiative, we are cautious about its potential returns. We believe the stock, trading at around 21.1x FY26E/17.2x FY27E EPS, appears fairly valued. Therefore, we maintain a Neutral rating with a TP of INR1,030, based on 18x FY27E EPS.

Outlook

We believe the stock, trading at around 21.1x FY26E /17.2x FY27E EPS, appears fairly valued. Therefore, we maintain a Neutral rating with a TP of INR1,030, based on 18x Jun’27E EPS.