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Amara Raja Batteries Ltd Research Report - 09th Nov 2016

Auto Ancillary | Published on Nov 08th 2016

IT

We believe that ARBL is likely to continue gaining market share in the automotive battery segment. The strategy followed by automotive OEMs of sourcing from multiple vendors as against having a single vendor is likely to benefit ARBL. Further, with the company’s strengthening distribution network in the Western and Eastern markets, we expect replacement sales to grow in strong double digits, going forward. We also expect healthy growth in exports as company is targeting ~10% of sales form exports from current ~6%. Overall, we expect ARBL to post a healthy top-line CAGR of 19% over FY2016 to FY2018E on the back of strong recovery in OEM market, brand strength and gain in market share. We also assume company to benefit from its ongoing capacity expansion program. We expect ARBL to clock 20% earnings CAGR over the next two years. We maintain our positive view on the stock and reiterate our Buy rating on the stock with a target price of Rs1,167 (based on 28.5x FY2018E earnings).

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CMP 1,010
Target Price 1,167
Investment Period12 Months

Stock Info

MCAP BSE (Rs in Cr)14,664.25
MCAP NSE (Rs in Cr)14,662.55
P/E (x)30.06
EPS (Rs.)28.56
BV (Rs.)139.39
Div Yield (%)0.50
FV (Rs.)1.00
P/BV (x)6.16
EV/Sales (x)3.12
EV/EBITDA (x)20.50

Shareholding Pattern (%)

Promoter52.0
Foreign26.0
Public & Others11.0
Institution8.0
Corporate3.0
Grand Total100.0

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