Amara Raja rallies 11% post Q2 results; Motilal Oswal sees stock at Rs 590

Shares of Amara Raja Batteries surged 11 per cent in Friday's trade after the  automotive battery manufacturer reported better than expected September quarter results. The Andhra Pradesh-based company reported a 39.42 per cent YoY jump in consolidated profit after tax at Rs 201.22 crore for the September quarter, thanks to higher sales.

The company had reported a consolidated profit of Rs 144.32 crore in the year-ago quarter.

Following the development, the stock rose 10.6 per cent to hit a high of Rs 574.95 on BSE.

"Amara Raja's Q2FY23 earnings were led by softening of raw material costs coupled with volume growth across segments. The recent moderation in lead prices will aid margin recovery. Volumes should see an upward trajectory in both automotive and industrial segment," said Motilal Oswal Securities.

Amara Raja said its consolidated revenue from operations stood at Rs 2,700.47 crore in September quarter against Rs 2,264.15 crore in the year-ago period. Total expenses rose to Rs 2,449.11 crore from Rs 2,097.17 crore in the year-ago quarter, it said.

Motilal Oswal has raised its FY23 EPS estimate by 28 per cent and FY24 by 14 per cent to factor in the recovery in the automobile segment and exports; and also the softening raw material costs.

It has a 'Neutral' rating on the stock with a target of Rs 590.

Meanwhile, Amara board has approved an interim dividend of Rs 2.90 per equity.

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