Showing posts from September 23, 2012

Amara Raja Batteries: Buy

The strong demand from the auto replacement side and the pick-up in industrial battery sales are positives for the company.
September 22, 2012: A robust replacement market for automotive batteries and improved industrial battery sales have put Amara Raja Batteries (ARBL) in a sweet spot. Investors with a perspective of at least one year can buy the stock. The company derives about 60 per cent of its revenues from the auto segment, where it counts Ford, Maruti, Hyundai, Honda, Mahindra & Mahindra, Tata Motors, and Tafe among its clients. The industrial division, in which the company primarily makes telecom and UPS batteries, brings in the rest of the revenues. At the current market price of Rs 401, the stock trades at a price to earnings ratio of about 12.5 times its estimated earnings for 2012-13. This is at a justifiable discount to the bigger peer Exide Industries, which trades at 20 times estimated FY13 earnings. While the stock has moved up by about 82 per cent since our pr…