Sharekhan’s research report on Amara Raja Batteries
Q2FY2022 results were below expectations due to sharper contraction in EBITDA margin than expectations. We have reduced our earnings estimates by 15.7%/8.6% for FY2022E and FY2023E to build in drop in EBITDA margin. Further, we expect Amara’s revenue and earnings to report a CAGR of 18.9% and 10.4%, respectively, during FY2021-FY2023E. The stock trades below its historical average P/E multiple of 13.2x and EV/EBITDA multiple of 6.7x its FY2023 estimate
Outlook
We maintain our Buy rating on Amara Raja Batteries Limited (Amara) with a revised PT of Rs. 784, owing to price correction, a brighter demand outlook for batteries, and comfortable valuations.
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