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Equity Bottom-Up

Amara Raja Energy & Mobility / Equity Bottom-Up

<div class="content-highlight">Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.</div>

Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

The domestic lead acid battery space is set to witness substantial disruption in coming years as India increasingly encourages green mobility. While the transition away from fossil fuel-powered transport is set to be fairly gradual, addressable market for incumbent lead acid ecosystem would shrink, thereby throwing up both an opportunity as well as a challenge to players like ARBL. At present, ARBL has set up a lithium-ion technology research hub with pilot plant facility for cell development and has pack assembly capabilities for industrial and automotive use.<div class="content-highlight">Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.</div>

The domestic lead acid battery space is set to witness substantial disruption in coming years as India increasingly encourages green mobility. While the transition away from fossil fuel-powered transport is set to be fairly gradual, addressable market for incumbent lead acid ecosystem would shrink, thereby throwing up both an opportunity as well as a challenge to players like ARBL. At present, ARBL has set up a lithium-ion technology research hub with pilot plant facility for cell development and has pack assembly capabilities for industrial and automotive use.Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

Independent Research Analyst

Mamta Verma

DC India Research

DC India Research LLP (DCIR) is based out of Mumbai, India.

We specialize in providing customized, independent research across listed and unlisted companies in India across equities and credit including sectoral research. Our customers include India focussed PE funds, special situation funds, domestic AMCs, Wealth Advisory& PMS firms, Rating Agencies & Investment Advisors. 

The DCIR board consists of prominent names from the industry as well as CIO’s of Hedge funds.

Amara Raja – P&amp;L Snapshot<table class="table table-striped"><tbody>
<tr>
<td>(Rs. Mn.)</td>
<td>Q4FY17</td>
<td>Q3FY18</td>
<td>Q4FY18</td>
<td>FY17</td>
<td>FY18</td>
</tr>
<tr>
<td>Net Sales</td>
<td>13,445</td>
<td>15,535</td>
<td>15,807</td>
<td>53,172</td>
<td>60,592</td>
</tr>
<tr>
<td>YoY (%)</td>
<td>17.4%</td>
<td>17.1%</td>
<td>17.6%</td>
<td>15.1%</td>
<td>14.0%</td>
</tr>
<tr>
<td>QoQ (%)</td>
<td>1.3%</td>
<td>8.8%</td>
<td>1.8%</td>
</tr>
<tr>
<td>Raw Material</td>
<td>9,144</td>
<td>10,390</td>
<td>10,866</td>
<td>35,619</td>
<td>41,163</td>
</tr>
<tr>
<td>as % of net sales</td>
<td>68.0%</td>
<td>66.9%</td>
<td>68.7%</td>
<td>67.0%</td>
<td>67.9%</td>
</tr>
<tr>
<td>YoY (%)</td>
<td>28.3%</td>
<td>20.4%</td>
<td>18.8%</td>
<td>19.5%</td>
<td>15.6%</td>
</tr>
<tr>
<td>QoQ (%)</td>
<td>6.0%</td>
<td>10.3%</td>
<td>4.6%</td>
</tr>
<tr>
<td>Employee Costs</td>
<td>705</td>
<td>758</td>
<td>783</td>
<td>2,778</td>
<td>3,090</td>
</tr>
<tr>
<td>as % of net sales</td>
<td>5.2%</td>
<td>4.9%</td>
<td>5.0%</td>
<td>5.2%</td>
<td>5.1%</td>
</tr>
<tr>
<td>YoY (%)</td>
<td>13.1%</td>
<td>4.7%</td>
<td>11.0%</td>
<td>14.3%</td>
<td>11.2%</td>
</tr>
<tr>
<td>QoQ (%)</td>
<td>-2.5%</td>
<td>2.2%</td>
<td>3.3%</td>
</tr>
<tr>
<td>Optg. &amp; Mfg. Exp</td>
<td>1,752</td>
<td>1,972</td>
<td>2,051</td>
<td>6,282</td>
<td>7,507</td>
</tr>
<tr>
<td>as % of net sales</td>
<td>13.0%</td>
<td>12.7%</td>
<td>13.0%</td>
<td>11.8%</td>
<td>12.4%</td>
</tr>
<tr>
<td>YoY (%)</td>
<td>-1.2…</td>
</tr>
</tbody></table>

Amara Raja – P&amp;L Snapshot

(Rs. Mn.)
Q4FY17
Q3FY18
Q4FY18
FY17
FY18


Net Sales
13,445
15,535
15,807
53,172
60,592


YoY (%)
17.4%
17.1%
17.6%
15.1%
14.0%


QoQ (%)
1.3%
8.8%
1.8%


Raw Material
9,144
10,390
10,866
35,619
41,163


as % of net sales
68.0%
66.9%
68.7%
67.0%
67.9%


YoY (%)
28.3%
20.4%
18.8%
19.5%
15.6%


QoQ (%)
6.0%
10.3%
4.6%


Employee Costs
705
758
783
2,778
3,090


as % of net sales
5.2%
4.9%
5.0%
5.2%
5.1%


YoY (%)
13.1%
4.7%
11.0%
14.3%
11.2%


QoQ (%)
-2.5%
2.2%
3.3%


Optg. &amp; Mfg. Exp
1,752
1,972
2,051
6,282
7,507


as % of net sales
13.0%
12.7%
13.0%
11.8%
12.4%


YoY (%)
-1.2…



Amara Raja - In-Line, Maintain Buy Investment Thesis

Risk-reward favourable, improving profitability profile, formidable position in Indian storage batteries, debt-free BS &amp; strong mgt. pedigreeQ3-FY18 Performance Summary –<ol>
<li>Topline came in at Rs. 15.5bn in q3-FY18, 17% YoY growth – led by healthy growth in volume across auto OEM and auto after market segments. Industrial segment too witnessed healthy traction in the UPS segment as well as significant improvement in telecom battery business. On sequential basis, topline grew at 9% in q3-FY18.</li>
<li>EBITDA…</li>
</ol>

Risk-reward favourable, improving profitability profile, formidable position in Indian storage batteries, debt-free BS &amp; strong mgt. pedigreeQ3-FY18 Performance Summary –
Topline came in at Rs. 15.5bn in q3-FY18, 17% YoY growth – led by healthy growth in volume across auto OEM and auto after market segments. Industrial segment too witnessed healthy traction in the UPS segment as well as significant improvement in telecom battery business. On sequential basis, topline grew at 9% in q3-FY18.
EBITDA…


Amara Raja: In-Line Q3-Fy18 Results. Maintain Investment Thesis

Asia Ex Japan; Technology and Consumption.

Rohinee Sharma

ASIA CONSUMER: INSIGHTS AND INVESTMENT IDEAS

Investory

Investory is a Singapore-based boutique independent equity research firm founded in January 2017 with a primary focus on consumption themes across Asia-Pacific.

We aim to generate investible ideas based on consumption trends and outlook. We screen our ideas on several parameters - product potential, long-term growth and management commitment being the most critical.  We follow a fundamental analysis approach in our stock selection process and are not restricted by market cap.

We aspire to grow into a leading source of unbiased research, free of conflict of interest, for investors yearning for independent and disciplined analysis. 

We also undertake bespoke research mandates to support our Institutional clients’ investment needs.

Our team comprises of professionals with extensive experience in the Asian equity markets, in areas ranging from research, servicing institutional clients and investment management.

Gravita is a  company whose philosophy is to usher in a better tomorrow by changing and nurturing the world for the better. Sounds like corporate vaporing? But it is literally what Gravita India Ltd does - Waste Recycling!  Twenty-five years ago the company took its first step with recycling of Lead ( 84% of revenues and 93% of EBIT -FY18E  ) and over the last few years added Aluminium and PET Recycling.The company's present size (market cap: US$150M) is no deterrent to its aspiration to become the largest recycler in the world by 2023. Our analysis does not give us reasons to doubt that they are executing well. The company generates very healthy ROEs of 28% and 31% ( FY18E &amp; FY19E, vs 22.5% FY17), has impressive sales and profit growth estimates in the range of 44 % and 61% for FY18 ( 45% and 43% for FY19E). Who said you can’t make money from trash ?!

Gravita is a  company whose philosophy is to usher in a better tomorrow by changing and nurturing the world for the better. Sounds like corporate vaporing? But it is literally what Gravita India Ltd does - Waste Recycling!  Twenty-five years ago the company took its first step with recycling of Lead ( 84% of revenues and 93% of EBIT -FY18E  ) and over the last few years added Aluminium and PET Recycling.The company's present size (market cap: US$150M) is no deterrent to its aspiration to become the largest recycler in the world by 2023. Our analysis does not give us reasons to doubt that they are executing well. The company generates very healthy ROEs of 28% and 31% ( FY18E &amp; FY19E, vs 22.5% FY17), has impressive sales and profit growth estimates in the range of 44 % and 61% for FY18 ( 45% and 43% for FY19E). Who said you can’t make money from trash ?!

From Trash To Cash: A Sustainable Recycling Theme

India

Amara Raja Energy & Mobility is a technology-led provider of energy and mobility solutions, and one of India's largest manufacturers of lead-acid and lithium battery technologies. The company serves automotive, industrial, and emerging new-energy applications, including Li-ion cells, battery packs, and charging solutions for electric vehicles and telecom infrastructure. Headquartered in Tirupati, Andhra Pradesh, India, the company was founded in 1985.

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Amara Raja Energy & Mobility (ARENM IN)

Amara Raja Batteries Ltd

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ICICI Securities Limited

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The domestic lead acid battery space is set to witness substantial disruption in coming years as India increasingly encourages green mobility....

ICICI Securities Limited

Amara Raja - In-Line, Maintain Buy Investment Thesis

Amara Raja – P&L Snapshot Q4-FY18 update: Topline grew 18% YoY led by 30% YoY value growth in automotive batteries; with industrial batteries...

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Amara Raja: In-Line Q3-Fy18 Results. Maintain Investment Thesis

Risk-reward favourable, improving profitability profile, formidable position in Indian storage batteries, debt-free BS & strong mgt....

DC India Research

From Trash To Cash: A Sustainable Recycling Theme

Gravita is a company whose philosophy is to usher in a better tomorrow by changing and nurturing the world for the better. Sounds like corporate...

Rohinee Sharma

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