This battery stock rallies 10% on strong Q2 results. Brokerages have 'Buy' tag
2 min read . Updated: 04 Nov 2022, 01:59 PM IST
Premium- Amara Raja Batteries shares jumped more than 10% on the BSE in Friday's trading session
Shares of Amara Raja Batteries Ltd jumped more than 10% to ₹579 apiece on the BSE in Friday's trading session after the company reported a 39% rise in consolidated profit after tax to ₹201 crore in the second quarter ended September 30, driven by higher sales, as compared to ₹144 crore in the same period last fiscal year.
Meanwhile, the company's consolidated revenue from operations stood at ₹2,700 crore against ₹2,264 crore in the year ago period. The company's board of directors at its meeting held also approved an interim dividend of ₹2.90 per equity share of the face value of Re 1 each.
“We maintain our positive view on Amara Raja due to: 1) increase in production capacity which will help gain market share in the OEM segment (new business orders in 2W from TVS and Hero); 2) sharp recovery in replacement and OEMs demand 3) diversification through foray into cell manufacturing and 4) correction in RM prices help in margin recovery," said brokerage Dolat Capital in a note as it has recommended Buy on Amara Raja shares with a target price of ₹591.
Amara Raja reported strong numbers in Q2 FY23 with margin at 13.3% (339bps QoQ) benefited from fall in Lead and Separator prices, partially offset by higher Plastic and fuel cost, the note stated. The brokerage believes that company would be a key beneficiary of strong growth in the PVs segment.
“Amara Raja share has given swing high breakout after breaching 200 DMA resistance. The stock is in uptrend and can go up to ₹625 apiece levels in next 1-2 months. Those who have this stock in their portfolio can hold the stock for the given target updating trailing stop loss at ₹530 levels," said Sumeet Bagadia, Executive Director at Choice Broking.
Amara Raja Batteries is the among the leading players in the lead-battery space in India and is now positioning itself to benefit from the growing EV market in the country. The battery stock is down about 10% in 2022 (YTD) so far.
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