Dolat Capital recommended Accumulate rating on Amara Raja Batteries with a target price of Rs 687 in its research report dated May 16, 2019.
Dolat Capital's research report on Amara Raja Batteries
Amara Raja’s Q4FY19 results were broadly in line with our estimates. The net revenue was ` 15.6bn (-1% YoY due to muted revenue from the automotive OEM segment and the telecom segment, offset by decent growth in the automotive replacement and inverter sales. The APAT grew 7% YoY to ` 1.20 bn, due to margin expansion. 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 implementation, 3) an uptick in the nascent e-rickshaws /solar battery segments.
We forecast Revenue/EBITDA/PAT CAGR of 9%/11%/10% over FY19-21E. We recommend Accumulate, with a TP ` 687 (20x FY21E EPS).
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