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 & H1FY19 but we are expecting better numbers in H2FY19.
During H1FY19, Its sales and EBITDA grew by 13.97 percent and 6.02 percent YoY, respectively, while PAT increased by 2.73 percent to Rs 233.26 crore. At the CMP, the stock trades at a P/E of 27x on TTM EPS. Stock has given strong break out on weekly chart. We are recommending a buy in staggered manner for medium to long term.
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