Buy Amara Raja Batteries; target of Rs 945: Chola Securities

Chola Securities' report onAmara Raja Batteries

Amara Raja Batteries Ltd (ARBL) is the second largest automotive battery manufacturer and the largest supplier of industrial storage batteries in India. It is a joint venture between the Galla family and US based Johnson Control (JCI) with 26% each. JCI, the global leader in lead - acid automotive batteries and advanced batteries for start - stop, hybrid and electric vehicles, provides technical support to A RBL.

Outlook

We introduce FY20E estimates Revenue/EPS 12.3%/20.2% YoY. At CMP, the stock is trading at a valuation of 23.5XFY19E and 19.5XFY20E earnings. We roll over our valuation to FY20E; valuing the company at 23XFY20E EPS to arrive at a target price of INR 945 and maintain a BUY rating.

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