Valuations factor in robust volume outlook for Amara Raja

Given cost pressures and high stock valuation, the stock could see pressure even after Monday's 6% correction

Shares of automotive and industrial battery maker Amara Raja Batteries plunged as much as 7.6 per cent intra-day on Monday as weak performance in the October-December quarter (third quarter, or Q3), coupled with expensive stock valuation, triggered strong profit booking.

Additionally, concerns over profitability and earnings took a toll on sentiment, and could keep the stock under pressure in the near-term.

The company’s revenue in Q3 grew 12 per cent year-on-year to Rs 1,960 crore, compared to the Street’s belief of Rs 2,010 crore, or 15 per cent growth. Capacity constraints restricted sales in the four-wheeler replacement segment impacting the company’s top