AMAR Amara Raja Batteries

MOSL: AMARA RAJA BATTERIES (Buy)-In-line operating performance-PAT above est

Amara Raja Batteries: In-line operating performance; PAT above est. led by higher other income

(AMRJ IN, Mkt Cap USD2.2b, CMP INR845, TP INR1035, 23% Upside, Buy)

 

  • Revenue in-line, helped by growth in auto, UPS and telecom segments: Net sales grew 17.1% YoY (+8.8% QoQ) to INR15.5b (in-line), led by growth in auto across the OE and aftermarket segments. This was led by continued channel expansion of Amaron and Powerzone brands. Further, higher exports to South-East Asia and Middle-East countries aided growth in the auto segment. Industrial battery segment too recorded growth, backed by higher sales in UPS segment and a sequential increase in volumes in the telecom segment.
  • EBITDA margin in line at 15.6%; lead inflation partially offset by price hike: Gross margin shrunk 90bp YoY (-190bp YoY) to 33% (in-line). Management indicated that continued lead price inflation was partially offset by appropriate pricing actions. EBITDA margin expanded 20bp YoY (-110bp YoY) to 15.6%, led by a favorable product mix (higher share of autos), optimal utilization, and price hikes. High other income and low depreciation boosted PAT by 20% YoY (+5.7% QoQ) to INR1.34b (est. of INR1.24b).
14/02/2018
10 pages
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Underlying

Industrial Goods & Services - India

Amara Raja Batteries engaged in the manufacture and sale of lead acid storage batteries for industrial and automotive applications in India. Co.'s industrial products include Powerstack batteries for use in telecommunications, power utilities, railways, defense, and other heavy industrial applications; and Amaron Quanta, a UPS battery with a back-up for a back-up. Co. offers automotive products, which include PRO, FLO, GO, Black, Fresh, Hi-way, Harvest, Shield, Pro Bike rider, and Optima batteries under the Amaron brand name. Co. supplies automotive batteries to various original equipment manufacturers.

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