Dolat Capital recommended accumulate rating on Amara Raja Batteries with a target price of Rs 684 in its research report dated July 22, 2019.
Dolat Capital's research report on Amara Raja Batteries
Amara Raja reported strong results in 1QFY20 in challenging conditions. Net profit jumped 25% YoY to ` 1.4bn, due to sharp margin expansion of 300bps and a low base. We remain positive about the Indian batteries market, as we expect 1) replacement demand to further improve, given healthy primary sales in the past three years, 2) a market share gain from unorganized players, after GST, and 3) an uptick in the nascent e-rickshaws /solar batter. We forecast Revenue/EBITDA/PAT CAGR of 8%/11%/10% over FY19-21E.
At CMP, the stock trades at 19/18x for FY20/21E EPS (vs 5 year historical multiple of 28), we recommend an Accumulate rating, with a TP ` 684 (20x FY21E EPS).
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