Amara Raja Batteries hits lifetime high

In the past one month, the stock has outperformed the market by surging 34% compared to a 6% decline in the Sensex.

Shares of Amara Raja Batteries (ARBL) have surged by 15% to Rs 1,132, also their lifetime high on the BSE, in an otherwise volatile market.

In the past one month, the stock of auto parts and equipment maker has outperformed the market by surging 34% from Rs 844 on July 27, compared to a 6% decline in the S&P BSE Sensex.

The company had reported a 15% year on year (Y-o-Y) jump in its net profit at Rs 122 crore for the quarter ended June 30, 2015, driven by strong revenue growth in the automotive segment and favorable lead prices.

Angel Broking expect ARBL to record a healthy top-line compound annual growth rate (CAGR) of 21% over FY2015 to FY2017.  Also, given the softness in lead prices, the margins are expected to remain at elevated levels. We expect ARBL to clock 27% earnings CAGR over the next two years.

ARBL is likely to continue gaining market share in the battery segment. The strategy followed by automotive original equipment manufacturer’s (OEM) of sourcing from multiple vendors as against having a single vendor is likely to benefit ARBL. ARBL has already received approval from new OE customers (recently got approval from Bajaj Auto, Royal Enfield and Mahindra & Mahindra) which is likely to result into increased revenues, the brokerafe house said in a research report.

At 02:46 PM, the stock was up 10% at Rs 1,080 on the BSE. A combined 912,164 shares changed hands on the counter on the BSE and NSE so far.