Views on Amara Raja Batteries 3QFY2014 results - Angel Broking

Views of Mr. Yaresh Kothari (Research Analyst - Auto & Auto Ancillary, Angel Broking) on Amara Raja Batteries 3QFY2014 results:

- Amara Raja Batteries results beats estimates

- Amara Raja Batteries stock trading up by 5%

"Amara Raja Batteries (AMRJ) reported an extremely strong performance for 3QFY2014, beating our as well as consensus estimates, led by a robust operating performance. The company's results have been commendable given that the market leader, Exide Industries, witnessed sharp decline in the top-line and deterioration in EBITDA margins during 3QFY2014.

For 3QFY2014, AMRJ's top-line surged 13.4% yoy (6.9% qoq) to Rs. 863cr driven by continued traction in the automotive and telecom replacement segments in our view. Additionally, increase in supplies to HMSI could also have benefited the top-line during the quarter. On the operating front, EBITDA margins improved 141bp yoy (flat qoq) to 17.4% owing to superior product-mix and operating leverage benefits. As a result, the operating profit surged 23.4% yoy (5.9% qoq) to Rs. 150cr. Led by a robust operating performance, net profit grew 17.4% yoy to Rs. 95cr. On a sequentially basis, net profit stood flat as tax rate increased to 33% as opposed to 29.4% in 2QFY2014.

AMRJ has announced an ambitious capital expenditure plan of Rs. 760cr to ease the capacity constraints across the product segments that it is facing currently. We expect the company to sustain its growth momentum going ahead, led by widening reach, strong product offerings and increasing capacity. We maintain our Accumulate rating on the stock; our target price is currently under review."

Source : Equity Bulls

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