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.
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).
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