Buy Amara Raja Batteries: target of Rs 1060 : Sharekhan

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Sharekhan's research repor on Amara Raja Batteries

Amara well-positioned to gain market share in lead acid battery business by adding clients and widening replacement distribution network. EBITDA margins to remain strong at 17.5% in FY22E driven by favourable product mix, led by a higher share of revenues from replacement segment, operating leverage and cost-cutting measures. Stock attractively valued with P/E multiple of 18.3x and EV/EBITDA multiple of 9.3x its FY2023E estimates, and is at a 20-25% discount to its long-term average multiples.

Outlook

We maintain our Buy rating on Amara Raja Batteries (Amara) with a revised PT of Rs. 1,060, factoring better multiples owing to a better outlook for automotive and select industrial segments (telecom and UPS).

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