Amara Raja Energy & Mobility Ltd. share price target

Background: Amara Raja Batteries Limited is the technology leader and one of the largest manufacturers of lead acid 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...

Background: Amara Raja Batteries Limited is the technology leader and one of the largest manufacturers of lead acid 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...

AMRJ's 1QFY22 performance was led by strong revenue growth across segments. Drivers for demand are in place, but rising RM prices (lead, plastic, sheet metal, and copper) could restrict performance in the near term. AMRJ is geared up for the next phase of transformation in the Lead Acid Battery segment. It is also foraying into the New Energy business: lithium ion/battery pack, EV charging products, energy storage solutions, etc. We expect this to be an important driver for the stock We cut our FY22E/FY23E EPS estimate by 13%/5% to account for higher...

ARBL said (1) electric 3-W and 2-W are expected to lead India's EV journey, (2) it is looking to address cell manufacturing and pack assembly (combined form ~55-60% of LIB value chain) along with possible local procurement of some materials like copper and aluminium foils, (3) global competitiveness can be achieved with ~10 GWh capacity (requires ~US$1 billion investment), (4) ~2-3 GWh capacity is required for every 1 million electric 2Ws sold, (5) present capabilities include 500 MWh assembly plant capacity, pilot R&D; plant for cell chemistry/design and products for electric 2-W, 3-W, (6) EV charging solutions capabilities span slow & fast AC charging and DC...

Amara Raja's senior management team presented (click here for the presentation) their new strategic initiative, laying down future growth drivers in the form of New Energy and Mobility. Key highlights from the meeting: Under this strategy, it is focused on value maximization in its core Lead Acid Battery (LAB) business and is foraying into the New Energy business in the form...

The domestic lead acid battery space is set to witness substantial disruption in coming years as India increasingly encourages green mobility. While the transition away from fossil fuel-powered transport is set to be fairly gradual, addressable market for incumbent lead acid ecosystem would shrink, thereby throwing up both an opportunity as well as a challenge to players like ARBL. At present, ARBL has set up a lithium-ion technology research hub with pilot plant facility for cell development and has pack assembly capabilities for industrial and automotive use. ABRL can potentially benefit...

Amara Raja reported stronger than expected Q4FY21. Its top-line and PAT were 21%/25% above our estimates. Its net sales increased by 33% YoY to Rs21 bn led by strong volume growth in both automotive and industrial applications. EBITDA was higher by 30% YoY to Rs3,165 mn, although EBITDA margin contracted 30bps YoY to 15.0%. Amara Raja's net profit rose 38% YoY to Rs1,895 mn aided by sharp increase in other income (+127% YoY to Rs321 mn). We lower our FY22 sales/PAT estimates by 3%/10% as we expect some weakness in H1 FY22 due to second wave of Covid-19 but we broadly maintain our FY23 estimates. We...

Plant fully operational now, no material impact from 4-5 days closure AMRJ's 4QFY21 operating performance was in line with our estimates as strong revenue growth led operating leverage diluted the impact of higher RM cost. Weak demand visibility and lead price inflation will impact near term performance. Its strategy to meet the upcoming challenge from new chemistries would be an important driver for the stock. We have left our FY22E/FY23E EPS estimate largely unchanged. We...

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...