Buy Amara Raja Batteries, expect strong Q2 numbers: Equity99

Spot great ideas: Damani recalling his first major trade outlined the importance of spotting good stocks. He gave example of CMC Ltd (which later merged with TCS), a public sector company which saw first round of divestment in 1992. The stocks were available at around 10-15 rupees a piece. This was the company which had developed Indian Railways reservation and ticketing system, revolutionising the experience. Despite, there were no buyers. Damani bought it and eventually it went up to Rs 800 within a year.

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26 Aug, 2025 12:21

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Sumit Bilgaiyan

With 26 percent equity each from the Galla Family and Johnson Controls (USA), Amara Raja Batteries (ARBL) is the technology leader and one of the largest manufacturers of lead-acid batteries for both industrial and automotive applications in the Indian storage battery industry.

ARBL supplies automotive batteries under OE relationships to Ford India, Honda, Hyundai, Mahindra & Mahindra, Maruti Suzuki, Ashok Leyland, and Tata Motors, Honda Motorcycles & Scooters India Private Ltd, Royal Enfield, Bajaj Auto Ltd among others.

Due to higher raw material prices, company had posted muted numbers for FY18 but we have seen some improvement in Q1FY19 numbers. Its sales and EBITDA grew by 18.8 percent and 14.2 percent YoY, respectively, while PAT increased by 13.2 percent to 113.03 crore. At the CMP, the stock trades at a P/E of 27.8x on TTM EPS. We are expecting strong numbers in Q2. We are recommending a buy in staggered manner for medium to long term.

Disclaimer: The author is Founder of Equity99. The views and investment tips expressed by investment experts on moneycontrol.com are their own, and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.