Amara Raja may head higher, test Rs 1039:Mayuresh Joshi

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26 Aug, 2025 12:21

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Mayuresh Joshi of Angel Broking told CNBC-TV18, "If you look at the two business segments of Amara Raja Batteries, automotive segment contributes 56 percent odd to the overall revenues, 44 percent comes from the industrial part. Now, within the auto segment itself the replacement segment itself contributes close to about 35 percent odd in terms of their topline and the market share of 25 percent that it has garnered over the past few quarters, I think that market share will keep on burgeoning as the quarters pass by." "Within the original equipment manufacturers (OEM) segment, it has got around 15 percent contribution coming in from the four wheeler segment. Vendors are probably looking at multi-vendors probably on the battery side. So, I think Amara Raja will gain market share even on that front. It is expanding the two wheeler capacity in a substantial manner from 8.25 million units close to 11 million units odd. You have seen tremendous amount of growth happening on all these sectors," he said. "On the replacement part it has grown around 21 percent in the quarter gone by, you probably looked at the four wheeler segment which has grown at 17 percent and the two wheeler segment which has grown probably at around 14-15 percent." "On the telecom part or the industrial part, out of 44 percent, I think 22 percent of the overall topline comes from the telecom vertical. The kind of capex that the telecom players are expected to do over the next few quarters is going to augur well for a company like Amara Raja which has a significant contribution coming in from the telecom vertical. The UPS probably dragged the overall revenues and the volume growth but clearly the entry into the home inverter segment and getting into tubular battery manufacturing is going to abet the company in a big manner." "If I talk about financials, we are still expecting an 18-19 percent topline growth, close to Rs 5,875 crore mark. With lead prices coming down the EBITDA margin should sustain between that 17.5 and 18 percent range and we are probably expecting an earnings growth in excess of 27-28 percent over the next couple of years. In terms of valuations, trades close to 23.7 odd times. It trades at a premium but I think the premiumisation should continue. So, a target of Rs 1,039 over the next 12 months and even greater targets if the capacity that they are probably getting in, the capex that has broadly gone out, I think the cash flows will definitely improve. So, I think the stock can even move higher."