Buy Amara Raja Batteries, target price Rs 863: Emkay Global

Emkay Global has given a buy rating to Amara Raja Batteries with a target price of Rs 863. The share price moved down by 0.40 per cent from its previous close of Rs 744.50. The stock’s last traded price is Rs 741.55.

Amara Raja Batteries Ltd., incorporated in the year 1985, is a Mid Cap company (having a market cap of Rs 12631.58 Crore) operating in Auto Ancillaries sector.

Financials
For the quarter ended 30-09-2020, the company reported a Consolidated sales of Rs 1935.52 Crore, up 68.13 % from last quarter Sales of Rs 1151.22 Crore and up 14.17 % from last year same quarter Sales of Rs 1695.31 Crore Company reported net profit after tax of Rs 201.27 Crore in latest quarter.

Investment Rationale
The brokerage expects revenue/earnings CAGR of 10%/14% for FY20-23E, with an average ROCE of 24% and FCF of Rs5.7bn/year. It maintains Buy rating with a revised TP of Rs 863 (Rs803 earlier), based on 15x FY23E EPS (Sep’22E EPS earlier).

Promoter/FII Holdings
Promoters held 28.1 per cent stake in the company as of Sept 30, 2020, while FIIs held 18.6 per cent, DIIs 14.2 per cent and public and others 39.1 per cent.