Company Update : Amara Raja Ltd by Motilal Oswal Financial Services Ltd
Margins in line; PAT beat on account of one-off gains
* Amara Raja’s (AMRJ) revenue grew 8% YoY to INR33.9b, in line with our estimate. This growth was primarily driven by the new energy business (+68.9% to INR1.7b), while lead acid and allied products posted modest growth (+4.7% to INR33b).
* EBITDA margin expanded 50bp QoQ (-210bp YoY) to 12% and was in line with our estimate.
* EBITDA declined ~8% YoY to INR 4.1b.
* During the quarter, AMRJ received a reimbursement in response to claims against a fire accident at its Chittoor facility. This translated into a one-time extraordinary gain of INR1.2b.
* Hence, reported PAT grew 25.4% YoY to INR4.1b. However, adjusted for this gain, PAT declined 12.1% YoY to INR2.1b (in line with our estimate).
* The Board has approved an interim dividend of INR5.4 per equity share for this quarter.
* At a consolidated level, OCF for 1HFY26 came in at INR5.3b, with INR6.4b spent on capex. AMRJ posted a negative free cash of INR1.1b for 1HFY26.
* Valuation view: The stock trades at 21.8x/18.1x FY26E/FY27E EPS
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SEBI Registration number is INH000000412
