Neutral on Amara Raja Batteries, target price Rs 860: Motilal Oswal

Motilal Oswal has neutral call on Amara Raja Batteries with a target price of Rs 860. The current market price of Amara Raja Batteries Ltd. is Rs 783.6. Time period given by analyst is one year when Amara Raja Batteries Ltd. price can reach defined target.

Amara Raja Batteries Ltd., incorporated in the year 1985, is a Mid Cap company (having a market cap of Rs 13401.09 Crore) operating in Auto Ancillaries sector.

Financials
For the quarter ended 31-03-2021, the company reported a Consolidated Total Income of Rs 2134.70 Crore, up 6.97 % from last quarter Total Income of Rs 1995.63 Crore and up 33.80 % from last year same quarter Total Income of Rs 1595.50 Crore. Company reported net profit after tax of Rs 189.38 Crore in latest quarter.


Investment Rationale
The stock trades at 19.1x/16.4x FY22E/FY23E EPS. The brokerage maintains Neutral rating with a TP of INR860/share (18x Mar’23E EPS, in line with its 10-year LPA) as expectations of better earnings growth balances out the increasing threat of lithium chemistry for both the Autos and Industrial Business.

Promoter/FII Holdings
Promoters held 28.1 per cent stake in the company as of March 31, 2021, while FIIs held 21.3 per cent, DIIs 12.6 per cent and public and others 38 per cent.