Amara Raja Q4 Results Review - Inline; Scouting For A Partner For Lithium Ion Foray: Motilal Oswal

Motilal Oswal Report

Amara Raja Batteries Ltd. reported in-line Q4 FY24 results, with Ebitda margin up 10 bp YoY at 14.6% (estimate: 14.7%). For its new lithium-ion business, the management expects to achieve Ebitda margin of 10-11% (versus blended five years average margin of 14.3%) and return on equity of 12-13% (versus blended five-year average ROE of 15.1%) at a scale of 10-12GWh.

While the market seems to be upbeat about Amara Raja's lithium-ion foray, we remain circumspect about the returns from the business. Moreover, after the recent run-up, the stock at ~24 times/21 times FY25E/FY26E EPS appears fairly valued.

We, hence, maintain our Neutral rating on the stock with a revised target price of Rs 1,090 (based on 18 times FY26E EPS).

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