Amara Raja Batteries - Q2FY21 Company Update - ICICI Direct

Amara Raja Batteries (ARBL) reported healthy Q2FY21 results. Net sales rose 14.2% YoY to Rs. 1,936 crore. As per management commentary, growth was attributable to all-round traction across business segments in automotive (OEM, replacement, exports) and industrial operations (telecom, commercial UPS). EBITDA in Q2FY21 was at Rs. 340 crore with corresponding margins at 17.6% (up 40 bps YoY) largely tracking lower other expenses. PAT declined 8% YoY to Rs. 201 crore, suffering from exceptionally low tax rate in base quarter. PBT for the quarter was up 17% YoY at Rs. 271 crore.

Valuation & Outlook

We introduce FY23E estimates and expect sales, PAT CAGR at 5.9%, 3.4%, respectively, over FY20-23E. We value ARBL at Rs. 715 i.e. 17x P/E on FY22E & FY23E average EPS of Rs. 42; ~15% discount to its long period averages amid ABRL's product category susceptible to EV risk. We downgrade the stock from HOLD to REDUCE. Capital efficient business model in terms of RoCE at ~18-20% and positive consistent CFO provide some comfort.

For details, click on the link below: https://www.icicidirect.com/mailimages/IDirect_AmaraRaja_CoUpdate_Nov20.pdf

Shares of AMARA RAJA BATTERIES LTD. was last trading in BSE at Rs.800.7 as compared to the previous close of Rs. 789.35. The total number of shares traded during the day was 22077 in over 1093 trades.

The stock hit an intraday high of Rs. 804.5 and intraday low of 786.55. The net turnover during the day was Rs. 17586190.

Source : Equity Bulls

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