Reduce Amara Raja Batteries; target of Rs 845: Dolat Capital Market

Dolat Capital Market recommended reduce rating on Amara Raja Batteries with a target price of Rs 845 in its research report dated October 27, 2020.

Broker Research

October 29, 2020 / 11:10 AM IST

live

bselive
nselive

Volume

Todays L/H

Dolat Capital Market's research report on Amara Raja Batteries

Amara Raja demonstrated strong operating performance in Q2FY21. Revenue was Rs 19.36bn (+14.2% YoY), led by recovery in demand from the automotive (both OEM and Replacement) and the industrial segment. In addition, supply chain disruption faced by its competitors also aided the revenue growth. While the overall demand scenario has improved since reopening of the economy, replacement demand is moderated for the four wheeler segment. Although 2W battery demand is strong, there is short supply in most parts of the country.

Outlook

We increase our EPS estimates by 3.4% for FY23E. At CMP, the stock is trading at 19/17x FY22/23E EPS. Given the valuation constraint and pressure on gross margins due to increasing input prices, we change our rating from Accumulate to Reduce and value stock Rs 845 (18x FY23E EPS).

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.