Amara Raja Batteries Limited (AMRJ) reported a disappointing set of numbers in Q1FY19, on operating and net profit front, though top-line exceeded expectations. Standalone revenue was up 19% yoy (13% qoq) at Rs1,779cr, ahead of the consensus estimate of Rs1,697cr. EBITDA stood at Rs220cr, up 14% yoy (5% qoq). Higher raw material costs exerted pressure on operating margins, leading to 49bps yoy contraction (95bps qoq contraction) in EBITDA margin to 12.4%. EBITDA and EBITDA margin were lower than consensus estimate of Rs254cr and 15%, respectively. Growth in PAT was similar to EBITDA growth at 13% yoy (3% qoq). AMRJ reported a standalone PAT of Rs113cr, lower than the consensus estimate of Rs135cr.
Revenue growth during the quarter was led by strong underlying growth in the Indian automotive space (2Ws and 4Ws). In volume terms, domestic automotive growth was 18% yoy in Q1FY19, providing a firm base for AMRJ to grow.
The management stated that telecom segment demand continues to be under stress owing to overall telecom scenario prevailing in the market. Barring this all other segments of the Industrial business registered double digit growth.
EBITDA margin during Q1FY19 was dented due to high raw material expenses. While lead prices are down 1% sequentially, they are up nearly 15% yoy, leading to the margin pressure. The pressure on EBITDA margin also indicates high competitive intensity and difficulty in taking price hikes.
The Board of Directors approved investment worth Rs700cr for setting up a new green-field automotive battery plant with capacity of 6.5mn units per annum. The project will be implemented in three phases.
Amara Raja Batteries Ltd ended at Rs. 822, up by 0.4 points or 0.05% from its previous closing of Rs. 821.60 on the BSE.
The scrip opened at Rs. 820 and touched a high and low of Rs. 828.55 and Rs. 814.90 respectively. A total of 2,52,444 (NSE+BSE) shares were traded on the counter. The stock traded below its 200 DMA.
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