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ICICI Direct Report
Amara Raja Batteries Ltd. is a part of the duopolistic organised Indian lead acid battery market with a strong presence across automotive (original equipment manufacturer, aftermarket) and industrial battery space (uninterruptible power supply, telecom, solar, etc).
Key triggers for future price performance:
Sizeable presence in Li-On battery domain in both automotive and industrial.
Scalable business prospects in the present capabilities in the electric vehicle ecosystem such as EV chargers and electronics that go into energy storage systems.
Given widespread electrification thrust, healthy OEM sales and pick-up in industrial segment, we build ~14% sales compound annual growth rate over FY22-24E.
With commodity prices expected to stabilise in the near term, Amara Raja's Ebitda margins are seen in the range of ~10-11%, going forward, over FY23E-24E.
Strong dealer network in after market segment (Amaron Dealers).
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