Sharekhan has given Buy recommendation for Amara Raja Batteries with a target price of Rs. 1146 in its research report issued on Feb 12, 2021
Sharekhan’s research report on Amara Raja Batteries
Q3FY21 revenues broadly in-line with our estimates but misses on EBITDA margin. Amara well-positioned to gain market share in lead acid battery business by adding clients and widening replacement distribution network. EBITDA margins to remain firm, driven by favourable product mix, led by a higher share of revenues from replacement segment, operating leverage benefits and cost-cutting measures. The stock trading below its historical average multiples at P/E multiple of 19.6x and EV/EBITDA multiple of 10.0x its FY2023 estimates.
Outlook
We maintain our Buy rating on Amara Raja Batteries (Amara) with a revised PT of Rs. 1,146, owing to a improving batteries demand outlook for automotive and industrial segments (telecom and UPS).