Amara Raja Batteries Ltd's Q2FY19 standalone net profit declines 5.49% yoy to Rs120.23cr: In-line with Estimates

The company’s standalone revenue stood at Rs1,753.05cr, down 22.81% yoy and 1.44% qoq.

Nov 09, 2018 02:11 IST India Infoline Research Team

Amara Raja Batteries Ltd Q2FY19

Standalone Results Q2FY19: (Rs. in cr)

Q2FY19 YoY (%)
Revenue 1,753.05 22.8
EBITDA 236.62 [0.6]
EBITDA Margin (%) 13.5 [318]
Net Profit (adjusted) 120.23 [5.5]
***EBITDA margin change is bps
Amara Raja Batteries Limited (AMRJ) reported better than expected set of numbers in Q2FY19 on top-line and EBITDA fronts. Standalone revenue was up 22.8% yoy (-1.4% qoq) at Rs1,753cr, ahead of consensus estimate of Rs1,674cr. EBITDA stood at Rs237cr, down -0.6% yoy (up 7.4% qoq) against consensus estimates of Rs232cr. Higher raw material costs as percentage of sales, resulted in EBITDA margin contraction of 318bps yoy to 13.5%. PAT came in at Rs120cr, down 5.5% yoy (up 6.4% qoq) vs. consensus estimates of Rs123cr.

  • Robust revenue growth was aided by strong volumes across both automotive battery and industrial battery businesses.
  • The volume growth in the automotive battery business was driven by growth in the exports and original equipment segment. The management comments suggest that the volumes were driven by 2W OEM segment, where the sales have been stronger v/s PVs during the quarter. As per the management, the automotive battery business registered a noticeable increase in market share in the current quarter.
  • The industrial battery business saw robust double-digit growth across segments in terms of volume and market share. The telecom industry continues to be under financial stress, resulting in demand uncertainty for batteries.
  • Raw material cost as a percentage of sales was higher by 309bps yoy, potentially impacted by rupee depreciation. Lead prices (MCX) have declined ~10% yoy and qoq during the quarter.
  • Other expenses and employee cost were largely flat on a yoy basis.
  • Higher depreciation expense (Rs64cr vs. Rs58cr in Q2FY18) and higher effective tax rate (34.9% vs. 33.3%) resulted in a higher decline in PAT on a yoy basis in comparison to the yoy EBITDA decline.
  • The Board of Directors has approved a total capital investment of Rs540cr for the deployment of advanced stamped grid technology which will enable high-performance batteries.

Technical View:

Amara Raja Batteries Ltd is currently trading at Rs774, down 6.05 points, or 0.78%, from its previous close of Rs780.05 on the BSE. The scrip opened at Rs785 and has touched a high and low of Rs785 and Rs761, respectively. So far, 11,18,623 (NSE+BSE) shares were traded on the counter. The stock is currently trading above its 200-DMA.

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