- We expect AMRJ’s revenue to grow 22.5% YoY (2% QoQ) to INR10.9b.
- Growth would continue to be driven by a revival in demand from auto OEMs and replacement segment.
- Average lead cost has declined by 10% QoQ, the benefit of which is likely to accrue with a lag.
- EBITDA margin is likely to expand 180bp YoY (40bp QoQ) to 17.3%.
- We expect PAT to grow 30.1% YoY to INR1b.
- We increase FY16E/FY17E EPS by 0.7%/9.3% to factor in for higher volumes and better EBITDA margins.
- The stock trades at 26.4x/17.8x FY16E/17E EPS. Maintain Buy.
Key issues to watch for
- Update on demand environment for OEMs, auto replacement and industrial battery segment.
- Outlook on RM cost trend, recent pricing action and currency hedges, if any.
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- Update on capacity expansion plans across product segments.