Amara Raja Energy & Mobility Ltd. share price target

Amara Raja Batteries (AMRJ) delivered subdued Q2FY17 performance. It was below our estimates on all parameters. Decent volumes growth resulted in double top line growth during the quarter. Its Revenue/EBIDTA/PAT grew by 16.9%/14.9%/10.4% YoY, and 1.9%/1.1%/4.3% QoQ to Rs13.5bn/Rs2.3bn/Rs.1.36bn, vis--vis our estimate of Rs13.99bn/Rs2.48bn/Rs.1.46bn respectively in Q2FY17. Management targets healthy growth for automotive replacement segment, as well as OEM segment due to new capacity in 2W and 4W segments. However, lower margin performance and lower bottom line growth indicates higher competition and reducing pricing power to pass on cost escalation.

With experienced management, differentiated product portfolio, strong parental support (Johnson Control, which holds 26% stake) and timely ramp up of capacities, ARBL is well placed to leverage its strength and benefit from the demand revival OEM, replacement and industrial segments.

Background: Amara Raja Batteries Ltd (ARBL), a Joint Venture between Amara Raja Group & Johnson Controls, each holding 26% stake, is the second largest battery manufacturer in India. It is the largest manufacturer of standby valve regulated lead acid (VRLA) batteries in the Indian Ocean Rim region and manufactures automotive batteries for all vehicle segments. With a production capacity of 18mn units (Automotive: 14.5 mn & Industrial (MVRLA) - 3.6 mn), ARBL has built a strong pan-India distribution network of 30,000 retailers and 274 franchisees (Amaron network) & 900 retailers (Powerzone network). ARBL's market share in different segments: 4-wheeler...

In-line; sales up ~17% YoY (est. of +13% YoY), EBITDA margins at 17.2%: Amara Raja Batteries’ (AMRJ) 1QFY17 net sales grew 17% YoY (+13% QoQ) to INR13.2b, driven by 30% YoY growth in both 2W and 4W replacement markets, coupled with 15% YoY growth in the UPS segment. Telecom vertical was flat YoY.: The stock trades at 27.1x/21.8x FY17/18E EPS. Maintain Buy with a target price of ~INR1,038 (~25x FY18E EPS).

ARBL reported Q1FY17 results with a revenue (net of excise duty) of Rs.13.2 bn, growth of 16.8% / 12.9%, YoY / QoQ respectively led by traction in replacement market and increasing volume of OEM sales. The EBITDA stood at Rs. 2.3 bn vs Rs.2.0 bn last year and margin contracted by 49 bps YoY to 17.2% from 17.7% in Q1FY16. Reported PAT grew by 6.7%/ 20.3% and margin contracted by 94 bps YoY. BOB Capital Markets Ltd maintain HOLD rating with a price target of 1,016 (25x on FY18e EPS).

ICICI Securities Ltd | Retail Equity Research Amara Raja Batteries' (ARBL) revenues (net of excise duty) came in at | 1,321 crore (up 15.4% YoY), in line with our expectations of | 1,320 crore. The automotive segment maintained its growth trend in all verticals of the businesses while the industrial battery posted double digit volume growth in a challenging & competitive market condition EBITDA margins came in at 17.2% (down 96 bps YoY but up 90 bps QoQ) marginally below our estimate of 17.3%. Despite the fall in raw...

ICICI Securities Ltd | Retail Equity Research Amara Raja Batteries' (ARBL) revenues came in at |1,170 crore (up 9.3% YoY), below our expectations of | 1,276 crore. The top-line...

Amara Raja Batteries Ltd (ARBL) is engaged in the business of manufacture and sale of lead acid storage batteries for industrial and automotive applications. It is a joint venture between the Galla family and US based Johnson Control Inc. (JCI). Its products are supplied to various user segments, such as telecom, railways, power control and uninterruptible power supply (UPS) under industrial battery business, and to automobile original equipment manufacturers (OEMs), replacement market and private label customers under automotive...

ARBL reported robust quarterly revenues of Rs. 12.2bn registering strong growth of 16% YoY led by growth across all verticals of automotive battery business. The EBITDA margin has expanded by 232...

Background: Amara Raja Batteries Ltd (ARBL), a Joint Venture between Amara Raja Group & Johnson Controls, each holding 26% stake, is the second largest battery manufacturer in India. It is the largest manufacturer of standby valve regulated lead acid (VRLA) batteries in the Indian Ocean Rim region and manufactures automotive batteries for all vehicle segments. With a production capacity of 18mn units (Automotive: 14.4 mn & Industrial(MVRLA)- 3.6 mn), ARBL has built a strong pan-India distribution network of 30,000 retailers and 274 franchisees (Amaron network) & 900 retailers (Powerzone network).ARBL's market share in different segments: 4-wheeler...