Most Undervalued Electrical Vehicle Related Stock for Future Multibagger

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

Financial Health

 -: 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.
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

Weekly RSI Now 41.5 & return from level 30. MACD converged fully & ready to cross the signal line(Redline). So Investors Must take a look to buy this gems stock Keeping stop loss @ 650.

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“Investing should be more like watching paint dry or watching grass grow. If you want excitement, take $800 and go to Las Vegas.” – By Paul Samuelson

Tata Consumer :A Rising Star in FMCG

Tata Consumer Products, is the India’s leading Branded Tea packet company. About 60% of revenue generated from Tea and coffee business. Recently company presented very Good performance not only in Tea business but other food business also presented robust performance in both Inside & outside India.

In the upcoming semi-annual review Tata Consumer Products may be included in the Nifty index for the rebalancing in March ‘2021, said Edelweiss Alternative Research.

ICRA UPGRADED the rating for the short-term instruments of Tata Consumer Products worth Rs 715 crore at A1-plus and also reaffirmed the rating for the long terrm instruments of Tata Consumer Products to 'ICRA AAA' with a stable outlook from AA-plus earlier. The company has low debt with FII / FPI or institutions increasing their shareholding.

In the Beverages business, Tata Consumer Products is the 2nd largest player in branded tea in the world with over 330 million servings everyday across the world. Their brands include Tata Tea, Tetley, Vitax, Eight O’Clock Coffee, Himalayan Natural Mineral Water, Tata Coffee Grand and Joekels. It is home to key brands such as Tata Tea, Tetley, Tata Salt and Tata Sampann.
Their Tata Tea brand is No.1 in terms of volume and No.2 in terms of value. Tetley brand is among the top 3 in the UK and Canada along with Eight O’ Clock which is the 4th largest player in coffee bags in the US.

Financial Snapshot

• TATACONSUM's forecast earnings growth (17.5% per year) is above the savings rate (7%).
  
  
• TATACONSUM's earnings have grown significantly by 22.7% per year over the past 5 years.
  
  
• TATACONSUM's earnings growth over the past year (38.8%) exceeds its 5-year average 
  (22.7% per year).
• TATACONSUM's earnings growth over the past year (38.8%) exceeded the Food industry
  20%. 
• TATACONSUM's debt to equity ratio has reduced from 20.5% to 7.5% over the past 5 years. 
  
  
• TATACONSUM's debt is well covered by operating cash flow (121.5%).
  
  
•  TATACONSUM's dividend payments have increased over the past 10 years. 
  
  
• TATACONSUM's dividends in 3 years are forecast to be well covered by earnings (39.6% payout ratio). 
  
  
• TATACONSUM's portfolio of products ranges from tea, coffee, water and ready-to-drink to salt, pulses, spices, ready-to-eat and more.
  
  The company overall shows promising growth opportunities and business synergies
  

Technical Outlook(Cmp Rs.601.50) 

Last Week Tata Consumer  given breakout just above Rs. 600. Traders & investors may buy keeping stop loss Rs. 550 for the target of Rs. 655+ shortly if sustain above 600. Investors are advised to buy every dips for the log term view & this stock must be in every portfolio.