Amara Raja lacks sparks for meaningful near-term stock revival
₹27,699 crore, marking a 6% year-on-year (YoY) growth and marginally surpassing market predictions. This surge was driven by aftermarket and industrial segments. However, performance in the OEM market remained subdued.
In their earnings call, the management said it expects growth in the two-wheeler and four-wheeler segments be in low double-digits and high single-digits, respectively, going ahead. As a result, the company could see potential market-share gains of about 150 and 50 basis points, respectively. The export outlook is also encouraging, projecting a 15-20% growth, buoyed by Asia Pacific and Middle East and North Africa (MENA) regions, and forays into other markets.
"Our analysis of four-wheeler (4W) automotive replacement battery industry volumes suggests that growth is likely to continue at a modest pace, at ~4%/7% y-y for FY24F/25F. Organized players like Amara Raja should grow at a slightly higher pace given its market share gains," said a report by Nomura Financial Advisory and Securities (India). Hence, it expects 10%/8% year-on-year growth of replacement volumes for Amara Raja for FY24F/25.
On the flipside, Q1 Ebitda margin at 12.8% missed the Street's expectations, hurt by weak a product mix and elevated costs. But the management expects improvement here if lead prices, which are currently at ₹190-200/kg, were to drop to Rs150-170/kg. But a crucial trigger for listed battery companies remains investments in lithium-ion technology as electric vehicles penetration is set to increase.
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