Views on Amara Raja Batteries 4QFY2014 results - Angel Broking

Views of Mr. Yaresh Kothari (Research Analyst – Auto & Auto Ancillary, Angel Broking) on Amara Raja Batteries 4QFY2014 results:

"Amara Raja Batteries (AMRJ) reported lower-than-expected 4QFY2014 results led by margin pressures primarily on account of the higher raw-material expenses. The top-line surged 10.5% yoy to Rs. 888cr, slightly lower than our expectations of Rs.903cr. The performance in our view was driven by continued traction in the automotive replacement segment and increase in supplies to HMSI. However, slowdown in OEM demand and sluggish off-take in the industrial battery segment constrained the growth to certain extent. On the operating front, EBITDA margins contracted 191bp qoq to 15.5%, sharply lower than our expectations of 16.5%, led by raw-material cost pressures which as a percentage of sales surged 133bp sequentially. As a result, operating profit declined 8.4% qoq to Rs. 138cr. On a yoy basis though, EBITDA margins surged 159bp driven by price increases in the industrial battery segment, superior product-mix and operating leverage benefits. Adjusted net profit for the quarter stood at Rs. 84cr (up 41.3% yoy but down by 11.7% qoq), slightly lower than our expectations of Rs. 90cr, primarily due to lower-than-expected operating performance. We remain positive on the stock, led by widening reach, strong product offerings and increasing capacity. AT the CMP the stock is trading at 14.4x FY2016E earnings. We maintain our Accumulate rating on the stock with a target price of Rs. 436."

Amara Raja Batteries 4QFY2014 Result Review (CMP: Rs. 394/ TP: Rs. 436/ Recommendation: Accumulate)

Shares of AMARA RAJA BATTERIES LTD. was last trading in BSE at Rs.429.8 as compared to the previous close of Rs. 412.95. The total number of shares traded during the day was 33735 in over 1927 trades.

The stock hit an intraday high of Rs. 432.6 and intraday low of 406.6. The net turnover during the day was Rs. 14340708.

Source : Equity Bulls

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