Company Update : Amara Raja Ltd By Motilal Oswal Financial Services Ltd
Below est.; profitability hit by high FPPCA charges
* 3QFY25 standalone revenue grew ~10% YoY to INR31.6b (in line), driven by exports, automotive after-markets, and UPS segment.
* Gross margin came in better at 33.1% (-90bp YoY/+70bp QoQ, est. 32.5%) due to lower lead prices
* However, the company stated that other expenses were higher due to increased electricity costs, driven by elevated FPPCA (fuel and power purchase cost adjustment) charges by the Andhra Pradesh government.
* This led to a 4% YoY decline in EBITDA to INR4.2b (est. INR4.5b). EBITDA margin contracted 200bp YoY/100bp QoQ to 13.1% (est. 14.3%).
* An exceptional item of INR1.11b was recognized in the P&L, representing the difference between the cumulative amount received and the insurance claim receivable.
* Adj. PAT declined 9% YoY to INR2.3b (est. INR2.6b).
* Valuation view: We will revisit our estimates after the earnings call. The stock trades at 17.9x FY26E/15.9x FY27E EPS.
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