January 24, 2017 / 16:55 IST
The demonetisation of currency & sharp increase in raw material price impacted its Q3FY17 performance. However, the management believes market conditions will normalise soon. ARBL undertook a price hike in the 3-7% range in December 2016. It has partly passed on the sharp increase in raw material cost (lead), which, we believe, is likely to cushion its margins, going forward.
Outlook
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ARBL’s key differentiator is the fact that it has consistently been able to grow its presence in the battery business across OEMs and end customers very smoothly. However, ARBL is trading at a huge premium (25% compared to EIL). Hence, we maintain our HOLD recommendation on the stock with a target of Rs 930, valuing at 25x FY18E.
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