Moneycontrol
Last Updated : Nov 14, 2018 05:17 PM IST | Source: Moneycontrol.com

Hold Amara Raja Batteries; target of Rs 835: ICICI Direct

ICICI Direct recommended hold rating on Amara Raja Batteries with a target price of Rs 835 in its research report dated November 12, 2018.

Broker Research @moneycontrolcom
 
 
live
  • bselive
  • nselive
Volume
Todays L/H
More

ICICI Direct's research report on Amara Raja Batteries


Amara Raja Batteries’ (ARBL) revenues grew 22.8% YoY to Rs 1,753 crore vs. our estimate of Rs 1,691 crore. Overall volume & price mix was at ~16% & ~7%, respectively. According to the management, its 2-W & 4-W business grew ~13% YoY & ~19% YoY, respectively, while the industrial segment grew ~35% YoY led by telecom, UPS & Railways. The growth in telecom is attributable to low base of last year and is getting stabilised now. Further, exports grew ~40% YoY to ~Rs 150 crore mainly due to higher offtake from Malaysia EBITDA margins contracted 318 bps YoY but expanded 111 bps QoQ to 13.5% vs. our estimate of 14.7%. On a YoY basis, margins were impacted by higher raw material cost (despite average lead price down 2.2% YoY to Rs 148/kg) as its gross margin contracted 309 bps YoY. Further, its cost of sourcing sulphuric acid has increased post closure of the Sterlite plant. The employee cost also surged post higher gratuity cost of Rs 7 crore in Q2FY19. PAT declined 5.5% YoY to Rs 120 crore vs. expectation of Rs 131 crore.


Outlook


Hence, we maintain our HOLD rating on the stock with a target price of Rs 835, valuing at 21x FY20E EPS of Rs 39.8/share.


For all recommendations report, click here


Disclaimer: The views and investment tips expressed by investment experts/broking houses/rating agencies on moneycontrol.com are their own, and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.

First Published on Nov 14, 2018 05:17 pm
Loading...
Sections
Follow us on
Available On
PCI DSS Compliant