Amara Raja Energy & Mobility Ltd. share price target

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's Q2FY21 result was a strong beat on all fronts. Its top-line /EBITDA were 23%/45% higher than our estimates. Amara Raja's sales increased by 14.2% YoY to Rs19,355 mn led by improvement across segments. EBITDA increased 16.4% YoY to Rs3,402 mn and EBITDA margin improved 33bps YoY to 17.6%. However, sharp fall in other income and higher tax expense resulted in 8.0% YoY fall in net income to Rs2 bn. We raise our FY21 sales/ EBITDA/ net profit estimates by 7%/14%/21% to factor better than expected Q2FY21 results. We also raise our FY22 sales/ EBTIDA/ net profit estimates by 4-6% and introduce FY23E numbers. We now value the stock at a PER 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%...

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...