Amara Raja Energy & Mobility Ltd. share price target

Replacement demand, benign lead prices to support! ARBL's segment mix was at ~75% automotive and ~25% industrial. Replacement demand forms a lion's share of automotive demand at ~70% while OEM demand makes up the rest. The auto OEM space has been witnessing muted demand since Diwali, thereby having a knock-on impact on ancillary players including battery makers. OEM demand is expected to remain subdued in the next few quarters amid vast regulatory changes (ABS, BS-VI) and general slowdown in consumer discretionary expenditure....

Weak OEM, Telecom impacts revenue growth; Mix, decline in RM drives margins First revenue decline since 1QFY10: Revenues declined by 1% YoY to INR15.7b (our est. INR16.9b), impacted by lead price pass-through (in 40-50% of the business). The healthy volume growth in aftermarket (4W 11-12% YoY, 2W 18-20% YoY) and exports (15-20% YoY) was offset by ~10% YoY decline in...

Broadly in line with our estimates; Accumulate Amara Raja's Q4FY19 results were broadly in line with our estimates. The net revenue was ` 15.6bn (-1% YoY due to muted revenue from the automotive OEM segment and the telecom segment, offset by decent growth in the automotive replacement and inverter sales. The APAT grew 7% YoY to ` 1.20 bn, due to margin expansion. We remain positive about the Indian batteries market, as we expect 1) replacement demand to further improve, given healthy primary sales in the past three years, 2) a...

In November 2018, Johnson Control had entered into an agreement with Brookfield Business Partners LP and institutional partners (collectively Brookfield) to sell its entire stake in the power solution business and focus on its core capability. The said transaction included transfer of the entire automobile battery business to Brookfield. It valued power solution business at US$13.2 billion, which clocked sales of US$8 billion in CY18 with corresponding EBITDA at US$1.7 billion (EBITDA margins 21%). On the valuation front, the said business was acquired at ~1.6 EV/sales and ~8x...

Amara Raja Batteries (ARBL) reported steady results for Q3FY19 Revenues came in at | 1,695 crore (up 9.1% YoY, down 3.3% QoQ) According to the management, the automotive segment displayed strong volumes during the quarter, especially in the aftermarket space. Industrial segment growth was steady in comparison EBITDA rose 4.6% YoY to | 253 crore. The EBITDA margin contracted 64 bps YoY but expanded 142 bps QoQ to 14.9%. On a YoY basis, margins were impacted due to higher raw material cost...

Amara Raja Batteries is the second largest automotive battery manufacturer...

Revenue in line lead price shows resilience 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. ARBL has approved an investment of Rs540cr for the deployment of...

Outlook and valuation: We believe Amara Raja holds durable competitive advantages over peers, with strong brand, technical expertise (via parent JCI global brand) and its lower cost structure (compared to its peers). We expect margins to improve in H2FY19 (despite weak H1FY19 margins) on price hikes, falling lead prices (down 6% in last 3 months) and cost improvement measures taken by the company. The company foresees opportunities in the energy storage and electric vehicles space. We maintain our ACCUMULATE rating on the stock with a revised target...

ICICI Securities Ltd | Retail Equity Research Amara Raja Batteries' (ARBL) revenues grew 22.8% YoY to | 1,753 crore vs. our estimate of | 1,691 crore. Overall volume & price mix was at ~16% & ~7%, respectively. According to the management, its 2-W & 4-W business grew ~13% YoY & ~19% YoY, respectively, while the industrial segment grew ~35% YoY led by telecom, UPS & Railways. The growth in telecom is attributable to low base of last year and is getting stabilised now. Further, exports grew ~40% YoY...