Amara Raja Bat,Raja Bahadur
The company had posted a set of remarkable set of numbers for Q2FY14 and in current Q3, though the numbers are good, the tempo seems to have got a bit tempered on account of higher tax outgo and raw material costs. It reported a 17% (YoY) rise in net profit at Rs.95 crore on a 13% rise in total income at Rs.863 crore. EBITDA was up 23% at Rs.150 crore and margins expanded 140 bps to 17.4%. What really dented the earnings was the 21% jump in raw material costs and tax expenses rose 35%.
The company’s fully integrated MVRLA battery plant in Andhra Pradesh went on stream by on 22nd Jan’14 and is expected to commence commercial production by March 2014. The enhanced capacities will support the company to commence business with other major Two-wheeler OEMs and to grow the aftermarket business in a big manner. The green field project for enhancement of Four-wheeler capacity is progressing as per schedule and is likely to commence production by Q2 of next financial year. The ongoing agitation for a united state of Andhra Pradesh in the Chittoor district has, so far, not had any major impact on the operations of the company, largely supported by the credibility enjoyed by the organization.
In terms of segment break up, the automotive battery business reported double digit growth in revenue, aided by strong volume expansion both in Two-wheeler batteries while marginal growth in four wheeler segment. The OEM demand continued to be sluggish. The trading volume in home UPS business suffered due to unfavorable season on account of mild summer and good monsoon. The supplies of Two-wheeler batteries to Honda Motors have picked up momentum in line with their throughput enhancement. Looking ahead, the company feels confident of continuing its growth in industrial battery business enabled by the ongoing capacity expansions and preferred vendor status built over the years both in the Telecom and UPS sectors. The sluggish growth in auto sector though remains a cause for worry.