Kotak Institutional Equities retains ‘add’ on Amara Raja Batteries, raises fair value to Rs 800

Kotak Institutional Equities has retained ‘add’ rating in the long term on Amara Raja Batteries and revised fair value to Rs 800 from Rs 720. Shares of Amara Raja Batteries ended up 3.7% at Rs 749.85 on Tuesday while BSE Sensex closed 413.45 points up at 41,352.17.

Company Financials

For the quarter ended 30-09-2019, the company has reported consolidated sales of Rs 1695.31 crore, down -6.59% from last quarter sales of Rs 1814.95 crore and down -3.29 % from last year same quarter sales of Rs 1753.05 crore. The company has reported net profit after tax of Rs 218.61 Crore in the latest quarter.


The company’s top management includes Dr.Ramachandra N Galla, Mr.Jayadev Galla, Mr.N Sri Vishnu Raju, Mr.Nagarjun Valluripalli, Mr.T R Narayanaswamy, Ms.Bhairavi Tushar Jani. Company has Deloitte Haskins & Sells LLP as its auditors. As on 30-06-2019, the company has a total of 170,812,500 shares outstanding.

Investment Rationale

The brokerage expects Amara Raja revenue growth to remain robust over FY19-22 led by (1) 10-16% revenue CAGR in two-wheeler and four-wheeler replacement segment, (2) 15% CAGR in the exports segment and (3) strong growth momentum in new segments such as motive power, e-rickshaws etc. Kotak Institutional expects EBITDA to remain around around 16% led by a higher mix of the replacement segment.