Emkay Global Financial's research report on Amara Raja Batteries
AMRJ’s Q1 revenue beat expectations, while margins missed estimates (down by 110bps QoQ to 12.8%; Emkay: 14.4%), on adverse mix and higher insurance spends. We build-in ~10%/~12% revenue/EBITDA CAGR over FY23-25E, factoring-in sustained recovery in the base lead-acid business (amid uptick in replacement demand and stability in RM prices). We introduce FY26 estimates and reduce FY24E EPS by 4.4%, to reflect the Q1 margin miss, keeping FY25E EPS unchanged. Importantly, with SOP for phase-1 of lithium cell capacity (2GwH) at least 2 years away (with uncertain financials), there is a lack of immediate triggers on the new technology front.
Outlook
We retain HOLD, with unchanged TP of Rs590/share at 11x its FY25E PER.
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