CMP: Rs148, 1-yr Target: Rs165, Upside: 11.5%
² Net sales at Rs. 1,761cr was higher than our and street estimates; represented a growth of 6.6% yoy and 15.5% qoq
² Stronger than expected revenues was owing to improvement in industrial and automotive battery sales
² OPM at 15.2% was better than our expectations and was higher by 77bps yoy but lower by 18bps on a qoq basis, gross margins were higher by 98bps yoy but lower by 84bps qoq
² PAT was at Rs. 178crs was above our expectations and higher by 29% yoy and 32.5% qoq
² Automotive demand is expected to strengthen with interest rate cuts, lower fuel prices and strong consumer sentiment, replacement demand is also expected to pick up especially in two wheeler space
² Mr. P. K. Kataky, will retire from services of the company and Mr. Gautam Chatterjee has been appointed as the Managing Director and Chief Executive Officer of the company beginning from May 01, 2016
² We retain our Accumulate rating with a price target of Rs165 as we believe that the recovery will be gradual and the large discount to Amara Raja Batteries should narrow down
Amar Ambani
Head of Research
IIFL
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