Automotive OEM production has ramped up significantly across segments over the past six months, with general near to medium term outlook remaining positive - partly on account of pent-up demand. Ensuing improved prospects for the entire channel (aftermarket revival started earlier) are set to benefit ARBL. Industrial demand has also been encouraging in the post Covid months. We expect continued traction there, with overall FY21E-23E sales CAGR at 11.2%. During Q3FY21, other expenses rose sequentially (absolute quantum as well as on percentage of...

AMRJ's 3QFY21 operating performance was below our estimate due to revenue miss and higher staff cost. RM cost pressures continue due to lead price inflation. However, sustenance of demand momentum will dilute impact through price pass-through and operating leverage. We have largely left unchanged our FY21E/FY22E EPS estimate. We maintain Neutral with a TP of INR957 per share (20x Mar'23E EPS) as valuations fairly capture in expected growth....

Healthy replacement offtake is seen leading to a favourable channel mix (as aftermarket margins are higher on account of it being a B2C business with better pricing power), thereby leading to margin trajectory at ARBL remaining broadly stable near the ~16% mark over FY22E-23E. We expect full year FY21E margins at ~15%, notwithstanding superior Q2FY21 margin performance, as incrementally higher OEM demand in H2FY21E is seen...

Background: Amara Raja Batteries Limited is the technology leader and one of the largest manufacturers of leadacid batteries for both industrial and automotive applications in the Indian storage battery industry. In India, Amara Raja is the preferred supplier to major telecom service providers, Telecom equipment manufacturers, the UPS sector (OEM & Replacement), Indian Railways and to the Power, Oil & Gas, among other industry segments. Amara Raja's industrial battery brands comprise PowerStack, AmaronVolt and Quanta. The Company is a leading manufacturer of...

Amara Raja (AMRJ)'s 2QFY21 performance was driven by sharp demand recovery across segments post the lifting of the lockdown. 3QFY21 would see some RM cost pressure due to lead price inflation; however, sustenance of demand momentum would dilute the impact through a price passthrough and operating leverage. We upgrade our FY21/FY22E EPS estimates by 7.7%/1.3% to factor in a volume upgrade. Maintain Neutral, with TP of INR800 (18x Sep'22 EPS) as valuations fairly capture expected growth. 2QFY21 revenue/EBITDA grew by ~14%/16% YoY to ~INR19.4b/INR3.4b....

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...

Amara Raja Batteries Ltd (Amara) Q2FY21 results were better than estimates across parameters. Topline growth recovered to 14% yoy as both auto and industrial demand recovered; margins improved on operating leverage Amara is expected to continue outpacing organized lead acid battery industry driven by new automotive OEM client addition and enhancing distribution reach in aftermarket. Telecom and UPS too have huge growth potential. Operating leverage and cost control measures would lead to margins remaining at higher end of historical band of 14-17%...

Amara Raja's future technology partnerships (after the exit of Johnson Controls) and its ability to foray into alternative battery chemistries will determine its growth opportunities in the long term. We initiate on Amara Raja Batteries with an ADD rating. Currently, the company has a ~20% market share in the USD 5bn lead-acid battery (LAB) segment. We expect it to gain further share as revenues are forecasted to grow in double digits over the next 3-5 years (vs. mid-single-digit for the industry). While Amara Raja would benefit from the shift towards the organised segment in the near term, we believe that the advent of new technologies such as lithium-ion will change industry dynamics; though the pace of adoption is expected to be very gradual.

Background: Amara Raja Batteries Ltd (ARBL) is the second largest automotive battery manufacturer and the largest supplier of industrial storage batteries in India. JCI, the global leader in lead-acid automotive batteries and advanced batteries for start-stop, hybrid and electric vehicles, provides technical support to ARBL. Company's business model is de-risked as it caters to automotive as well as industrial segments. Sales are...

Amara Raja Batteries Ltd (ARBL) is India's second largest Lead-acid battery manufacturer. Its segment include 70% from automotive & rest from industrial with a market leadership in Telecom segment. During Q1FY21, ARBL revenue came at 37%YoY due to subdued auto demand and lockdown. However, pickup in auto replacement market and in telecom sector has offset further decline. EBITDA margin came at 13.2% better than expected due to lower lead price and cost control initiatives. Material cost lowered by 110bps....

Amara Raja Batteries Ltd (ARBL) is India's second largest Lead-acid battery manufacturer. Its segment include automotive and industrial lead acid batteries, with market leadership in Telecom segment. Under challenging market condition domestic replacement demand and export has substantially overcome the demand slowdown in Auto OE segment aided by significant traction in volume growth. During Q4FY20, ARBL revenue came flat at 0.9%YoY, (marginally inline with our estimate). PAT grew by 14.5%YoY. Despite weak demand, EBITDA margin came at above 15% (-10bps),...

Background: Amara Raja Batteries Ltd (ARBL) is the second largest automotive battery manufacturer and the largest supplier of industrial storage batteries in India. JCI, the global leader in lead-acid automotive batteries and advanced batteries for start-stop, hybrid and electric vehicles, provides technical support to ARBL. Company's business model is de-risked as it caters to automotive as well as industrial segments. Sales are...

We expect margin trajectory to be better than most ancillaries on the back of (1) sustained strength of automotive replacement segment in overall mix, (2) benign outlook for lead prices (currently at ~US$1635/tonne vs. Q4FY20 average of ~US$1800/tonne). B2C nature of aftermarket, inherent pricing power (near oligopoly on supply side, demand is fragmented) are seen leading to flattish margin performance in FY21E (negating impact of limited...

decline in volume in the auto OEM segment was offset by growth in the domestic replacement segment and exports. The home UPS segment was under pressure, as the seasonal demand for inverter batteries was severely impacted by the lockdown restrictions in March. EBITDA was Rs 2.4bn (+0.4% YoY) and margin was 15.4% (-82bps QoQ). The negative operating leverage was partially offset by fall in lead prices, a better product mix and cost control measures. APAT grew15% YoY to Rs 1.36bn due to lower tax rate....

1 June 2020 AMRJs 4QFY20 performance beat was driven by a better mix (lower OEM sales). While aftermarket continued with strong growth, endorsing our view of value migration from unorganized, 4Q saw recovery in Telecom. We downgrade rating to Neutral as valuations fairly reflects for recovery and market share gains. Our TP is INR719 (18x Mar22 EPS, 10% discount to 10 year LPA). 4QFY20 revenue/EBITDA/PAT grew 0.9%/0.4%/14.5% YoY to ~INR15.8b/INR2.4b/INR1.4b. FY20 revenues/EBITDA/PAT grew 0.7%/15%/37% YoY to ~INR 68.4b/INR11b/INR6.6b.

Background: Amara Raja Batteries Ltd (ARBL) is the second largest automotive battery manufacturer and the largest supplier of industrial storage batteries in India. JCI, the global leader in lead-acid automotive batteries and advanced batteries for start-stop, hybrid and electric vehicles, provides technical support to ARBL. Company's business model is de-risked as it caters to automotive as well as industrial segments. Sales are...

Amara Raja Batteries Ltd (ARBL) is India's second largest Lead-acid battery manufacturer. Its segment includes automotive and industrial lead acid batteries, with market leadership in Telecom segment. During Q3FY20, ARBL revenue grew by 3.1%YoY, (marginally in-line with our estimate) due to strong replacement market....

Amara Raja's result was slightly better than our expectations. Its top-line was 8.3% above our estimate; however, EBITDA margin was 72 bps below our forecast. Amara Raja's sales increased 3.1% YoY to Rs17 bn and EBITDA increased 12.2% YoY to Rs2.8 bn. EBITDA margin expanded 132bps YoY mainly due to price hike taken by the company in the last one year. Amara Raja's net profit growth of 25.4% YoY to Rs 1,642...