Sharekhan has given Buy recommendation for Amara Raja Batteries with a target price of Rs. 629 in its research report issued on May 20, 2022

Sharekhan’s research report on Amara Raja Batteries

Q4FY22 results were below expectations due to continued contraction in EBITDA margin, led by input cost inflation. We expect gradual recovery on EBITDA margins for Amara and thus, have cut earnings estimates by 19%/30% for FY23E/FY24E respectively. The stock trades below its historical average at P/E multiple of 12.6x and EV/EBITDA multiple of 5.5x its FY24E estimates.

Outlook

We maintain our Buy rating on Amara Raja Batteries Limited (Amara) with a revised PT of Rs.629, owing to stock price correction, a brighter demand outlook for batteries, and comfortable valuations.

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