Amara Raja can give 25-30% return: Tulsian

Amara Raja Batteries can give 25-30% return, says SP Tulsian, sptulsian.com.

Tulsian told CNBC-TV18, "In the case of battery makers, it is more of their margin management. We all know that lead is the main cost for any battery maker. We see lot of volatility in the price of lead. Those companies who have a long-term contract, maybe a six-twelve month contract, where there is no price revision clause. It is very difficult for any battery maker to have a six months kind of lead inventory with them." He further added, "But when you talk to the management of Amara Raja Batteries, they have been very prudent in doing that. If you see their track record in the last three-four years, they may have failed in some quarters but that has given them experience. Generally, they have been holding their margin by not entering into very long-term time period contracts." "If I go by the fundamentals, they have a joint venture with Johnson Controls of the US with 26% equal stake by both the foreign promoters and the Indian promoter. If I take a call on the Q3 results, the performance has been quite good. If I extrapolate the same results for FY11, it is likely to post a topline of close to about maybe Rs 1,750 crore. The share is ruling at about maybe a P/E multiple of close to about Rs 10 because it is Rs 2 a share and is a debt free company." "I don