Hold Amara Raja Batteries; target of Rs 930: ICICI Direct

ICICI Direct's research report onAmara Raja Batteries

The Indian battery market is estimated to grow at 16.5% CAGR by FY20. The domestic industry is a duopoly in nature with, Exide (EIL) & ARBL controlling 90% of the organised market. The implementation of GST will improve their cost competitiveness vis-à-vis unorganised players (40% share) thereby gaining share, going forward.

Outlook

Also, with EIL’s performance gradually reviving, the premium valuation will now narrow down for ARBL. Hence, we maintain our HOLD recommendation on the stock and retain our target of Rs 930, valuing at 23x FY19E EPS of Rs 40.4 per share.

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