Buy Amara Raja Batteries, target price Rs 756: Sharekhan by BNP Paribas

Sharekhan by BNP Paribas has buy call on Amara Raja Batteries with a target price of Rs 756. The current market price of Amara Raja Batteries Ltd. is Rs 646.95.

Amara Raja Batteries, incorporated in the year 1985, is a Mid Cap company (having a market cap of Rs 11069.50 Crore) operating in Auto Ancillaries sector.

Amara Raja Batteries key Products/Revenue Segments include Batteries (Storage), UPS/Uninterruptible Power Supply Systems, Sale of services, Export Incentives and Scrap for the year ending 31-Mar-2022.

Financials
For the quarter ended 30-09-2022, the company has reported a Consolidated Total Income of Rs 2724.44 Crore, up 3.30 % from last quarter Total Income of Rs 2637.52 Crore and up 18.94 % from last year same quarter Total Income of Rs 2290.59 Crore. Company has reported net profit after tax of Rs 201.22 Crore in latest quarter.

The company’s top management includes Mr.Jayadev Galla, Mr.Harshavardhana Gourineni, Mr.Vikramadithya Gourineni, Mr.N Sri Vishnu Raju, Mr.T R Narayanaswamy, Ms.Bhairavi Tushar Jani, Mr.Annush Ramasamy. Company has Deloitte Haskins & Sells LLP as its auditors. As on 30-09-2022, the company has a total of 17 Crore shares outstanding.

Investment Rationale
The brokerage reiterates its buy rating on Amara Raja Batteries Ltd (ARBL) with a revised PT of Rs756, owing to its brighter outlook for batteries going forward and comfortable valuations. The stock trades below its historical average at P/E multiple of 12.7x and EV/EBITDA multiple of 5.8xits FY25E estimates.

Promoter/FII Holdings
Promoters held 28.06 per cent stake in the company as of 30-Sep-2022, while FIIs owned 18.34 per cent, DIIs 2.3 per cent.