Amara Raja Batteries slips 6% on disappointing Q4 operational performance

In Q4, Ebitda declined by 31 per cent year on year to Rs 220 crore due to lower-than-expected revenue and delay in passing on commodity inflation

Shares of Amara Raja Batteries slipped 6 per cent to Rs 498.55 on the BSE in Monday's intra-day trade, in an otherwise firm market, after the auto ancialliary company reported a disappointing operational performance in March quarter (Q4FY22).

The stock was trading close to its 52-week low of Rs 493.70, touched on May 12, 2022. In the past one month, it has corrected 12 per cent, as compared to 4 per cent decline in the S&P BSE Sensex. At 01:19 PM; the stock was down 5 per cent, as against 0.73 per cent rise in the benchmark index.

In Q4, the company's Earnings before interest, taxes, depreciation, and amortization (Ebitda) declined by 31 per cent year on year (YoY) to Rs 220 crore due to lower-than-expected revenue and delay in passing on commodity inflation.

Revenue grew 3.7 per cent YoY at Rs 2,181 crore from Rs 2,103 crore in the year-ago quarter. Profit after tax (PAT) almost halved or was down 49 per cent YoY at Rs 132 crore as against Rs 259 crore in Q4FY21.

Revenue dropped during the quarter owing to a volume drop of 20 per cent/25 per cent in 2W/inverter segments. Going forward, the management expects FY23 volume growth in auto replacement to be in double-digits, and industrial segments such as Telecom/UPS to see 7-8 per cent growth.

The company said it saw robust demand in the automotive sector from the replacement and export markets, though OEM sluggishness continued due to their manufacturing constraints. Industrial battery volumes have shown healthy growth, especially in the UPS, telecom and export segments.

Amara Raja Batteries is an energy and mobility enterprise and one of the largest manufacturers of energy storage products for both industrial and automotive applications in the Indian battery industry.

Analysts at Emkay Global Financial services have reduced its FY23/24 revenue estimates by 3 per cent each and EBITDA by 5 per cent each. "We build in a revenue CAGR of 11 per cent over FY22-24E, supported by a pick-up in Auto OEM and consistent growth in the auto replacement/industrial segments. Following the pass-through of commodity price increases and better scale, margins should improve," the brokerage firm said in result update.

It added: The company plans to commence work on a small Lithium-ion cell manufacturing facility this year with capability of multiple cathode cell chemistries. Any progress in this regard, such as the announcement of a project plan and forming tie-ups with OEMs for battery supplies, could provide clarity on long-term survival and growth.