Amara Raja Batteries (AMRJ IN) - Strong performance; maintain BUY - Earnings update - CSEC Research

- In 2QFY18, ARBL's revenue grew by 7.1% YoY to INR 14.2bn despite decline in Industrial segment. Automotive segment witnessed double digit revenue growth led by strong growth in both 4W and 2W segments. In Industrial segment, UPS and Railways witnessed positive growth while Telecom segment witnessed steep decline in revenue.

- EBITDA grew by 3.7% YoY & 23.5% QoQ to INR 2.3bn. EBITDA margin declined 60 bps YoY to 16.7%. However, sequentially increased by 380 bps on account of price hike, better product mix and cost optimization. Product mix improved on the back of higher share of Replacement segment and lower share of telecom business. PAT declined by 6.7% YoY to INR 1.2bn, impacted by higher tax rate.

Valuation: At CMP, the stock is trading at 22.6X FY19E. We maintain a BUY rating on the stock with a target price of INR 908 assigning 26X FY19E.

Risks: Uptrend in lead prices would negatively impact margins.

Shares of AMARA RAJA BATTERIES LTD. was last trading in BSE at Rs.824 as compared to the previous close of Rs. 796. The total number of shares traded during the day was 122330 in over 3583 trades.

The stock hit an intraday high of Rs. 825 and intraday low of 799. The net turnover during the day was Rs. 99774669.

Source : Equity Bulls

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