Amara Raja Batteries Ltd(NSE: AMARAJABAT) CMP-Rs.721
Amara Raja Batteries (ARBL), the flagship company of the Amara
Raja Group is a leading manufacturer of automotive batteries under the brands
- Amaron and PowerZone
The organization is the TECHNOLOGY LEADER and is the biggest
producer of lead-acid batteries for both mechanical and auto applications in
the Indian stockpiling battery industry.
In India, Amara Raja is the preferred supplier to major
telecom service providers, Telecom equipment manufacturers, UPS sector (OEM
& Replacement), Indian Railways and to Power, Oil & Gas, Passenger
Vehicles, Three Wheelers, Two Wheelers, Commercial Vehicles, Farm Vehicles,
Inverters. Additionally, Amara Raja Industrial Batteries offers a wide scope of
battery arrangements in portions like UPS, Telecom, Railways, Defense, and
Motive.
Most investors are disappointed who already stay invested in Electrical vehicle-related Stocks in perception for EV Boom but fruits are not riped till now. But remember this is high time to invest in Electrical vehicle-related Stocks. I have found out this very strong potential and undervalued growth stock which is fundamentally very strong for its consistent growth potential
-: Previous year & Future Sales And Profit Growth Estimation:-
Ø Amara Raja Batteries Ltd's earnings have grown
by 5.5%, whereas share price has declined -6.6% CAGR over the past five years,
indicating the company’s share price is likely undervalued.
Ø Amara Raja Batteries Ltd share price has
appreciated 20.3% annually (CAGR) over the past ten years.
Ø Amara Raja Batteries and Exide Industries each
have 30% market share in this industry in India
Ø Amara Raja Batteries already has a foreign
partner. Johnson Controls holds a 26% stake in the company. Johnson Controls has
the uniqueness to provide technical support and gain a stake in the company.
52 weeks High / Low Ratio | 1026/665 =1.54 | <2.2 is Good |
|
Current Ratio | 1.96 | > 1.25 is Good, | A liquidity ratio that measures a company's ability to pay short-term obligations. The higher the current ratio, the more capable the company is of paying its obligations. |
Quick Ratio (x) | 0.85 | > 1 is Good, | The quick ratio measures a company's ability to meet its short-term obligations with its most liquid assets. For this reason, the ratio excludes inventories from current assets |
Sales growth | 15% | CAGR >15% for last 7-10 years | Growth should be consistent year on year. Ignore companies where a sudden spurt of sales in one year is confounding the 10 years performance. Very high growth rates of >50% are unsustainable. |
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Price to Sales ratio (P/S ratio) | 1.56
| < 1.5 is Good | James O’Shaughnessy: Buy if P/S ratio is < 1.5 and sell if >3 |
Price to Book value Ratio(P/B Ratio) | 2.93
(Last 10 year average 3.44) | For a Good Company 3 – 6 is Ok &
< 4 is very good | A stock is termed as undervalued if it has a lower P/B ratio. A low P/B ratio may also mean a company has some problems with its fundamentals. |
Return On Asset (%) | 11.8 | > 5% is Good,
< 5% is Not Good | An indicator of how efficient management is at using its assets to generate earnings. Calculated by dividing a company’s annual earnings by its total assets |
Return On Equity (%) | 16.2%
| > 10% is Good, | Also called Return on net worth, it measures a company’s profitability by revealing how much profit a company generates with the money shareholders have invested, it is calculated by dividing the net profit after tax by shareholder's fund For high-growth companies you should expect a higher ROE. |
Cash Flow from Operation | 802 Cr | CFO>0 | Positive CFO necessary |
Tax Payout | 26%
| >30% Good | The tax rate should be near the general corporate tax rate unless some specific tax incentives apply to the company. |
Profitability (Net profit Margin) | 9% | >8 is Good | Look for companies with sustained operating profit & net profit margins over the years |
P/E ratio | 17.4
Industry P/E 21.4 | <Industry P/E is Good. | The P/E ratio is the most widely used parameter to analyze whether the stock of any company is overvalued or undervalued at any point in time. It is calculated by dividing the current market price (CMP) of stock by profit/earnings per share (EPS). |
Dividend Yield (%) | 1.52%
| > 0 is Good,
Higher is better | A financial ratio that shows how much a company pays out in dividends each year relative to its share price. The dividend yield is calculated as annual dividends per share divided by market price per share. |
P/E to Growth ratio (PEG ratio) | 3.15 | <1 is Good | The price/earnings to growth ratio (PEG ratio) is a stock's price-to-earnings (P/E) ratio divided by the growth rate of its earnings for a specified time period. The PEG ratio is used to determine a stock's value while taking the company's earnings growth into account and is considered to provide a more complete picture than the P/E ratio. |
Promoter shareholding | Promoter-28.1% Public- 34.6 % FII-22.1 % DII-15.24 %
| > 30% (Must for Promoter) | Higher the better |
Interest Coverage Ratio | 88 | > 2 is Good,
(For Banks & NBFC this is not Valid) | It is used to determine how easily a company can pay interest on outstanding debt. It is calculated by dividing a company's EBIT by interest expenses. |
Debt Equity Ratio | 0.02 | < 1 is Good,
(For Banks & NBFC this is not Valid) | A measure of a company's financial leverage is calculated by dividing its total liabilities by stockholders’ equity. The debt/equity ratio also depends on the industry in which the company operates. |
FAIR/INTRINSIC VALUE OF AMARA RAJA BATTERIES
What is the Intrinsic Value of AMARA RAJA BATTERIES?
As of 09-Sep-2021, the Intrinsic Value of AMARA RAJA
BATTERIES is Rs. 989.31 determined based on Median of the 3
historical models.
Fair Value [Median EV / EBIDTA Model] : Rs. 952.80
Fair Value [Median EV / Sales Model] : Rs. 1,016.93
Fair Value [Median Price / Sales Model] : Rs. 989.31
Median Fair Value of AMARA RAJA BATTERIES: Rs. 989.31
As of 09-Sep-2021, AMARA RAJA BATTERIES is trading at a
Discount of -27% based on the estimates of Median Intrinsic Value!
Technical Analysis
In the weekly chart, Price confluence at Rs. 683, which is very good support & price follows a downtrend channel & tries to break this trend channel to go upside. If price sustains above Rs. 730.
6th UP TARGET 2111.46
5th UP TARGET 1730.62
4th UP TARGET 1495.21
3rd UP TARGET 1259.81
2nD UP TARGET 1125.00
1sT. UP TARGET 1020.00
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