Amara Raja Q3 Results Review - Revenue Inline, Ebitda/Net Profit Beat Estimates: Motilal Oswal

Motilal Oswal Report

Amara Raja Batteries Ltd. Q3 FY24 financials were encouraging as Ebitda beat estimate at Rs 4.1 billion (versus Rs 3.8 billion), led by better-than-expected gross margin. Sustained growth in two-wheeler demand (original equipment/aftermarket volumes grew in 30%/15% YoY in Q3), stable replacement demand in price values, and recovery in industrials are expected to drive ~9% revenue compound annual growth rate over FY23-26E.

We raise our FY24E/25E earning per share by 7%/4% to factor in for recovery in two-wheeler demand and better gross margins. However, we believe the current valuations of ~17.5 times/16 times FY24E/25E EPS fairly reflects the recovery in the underlying industry and its prospects of foraying into new energy business.

We reiterate our 'Neutral' rating with a target price of Rs 825/share (14 times March- 26E EPS).

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