Amara Raja Battery is a company which need no explanation for investors .It is one of the star performer in Indian stock market for the past many years. Company is the second largest battery maker in India next to Exide and the leader in Industrial battery segment.Company having a 26% equity participation and technical collaboration with US conglomerate JohnsonControls.ARB introduced VRLA technology in India and with this ARB emerged as a strong competitor to then undisputed leader - Exide.From an Industrial battery maker ,now ARB grown as a known player in automotive segment and currently the share in auto-industrial batteries stand as 60:40 .In auto sector itself ,company’s major sales coming from replacement market where the margins are almost double compared with OEM supply.To mitigate the impact of slow growth in auto sector ,company is now looking into home UPS segment where potential is immense due to power shortage issues.
Since company is running near to 100% capacity utilisation in all
segments ,it is now expanding its production capacities across segments.Part of
this expanded capacity will be commercialised in the second half of this FY and
and the rest in next FY.It is increasing its Medium Valve Regulated Lead Acid
(MVRLA) battery capacity from 1.8 million unit per annum to 3.60 million units
per annum (production to start from Q3 FY 2013-14) , Large Valve Regulated Lead
Acid (LVRLA) battery capacity from 760 million Ah per annum to 1 billion Ah per annum
(production to start from Q4 FY 2013-14), Four-wheeler battery capacity from 5.6
million unit per annum to 8.2 million units per annum (production to start from
Q2 FY 2014-15), Two-wheeler battery capacity from 4.8 million unit per annum to
8.4 million units per annum (production to start from Q3 FY 2013-14). As per
company estimates its revenue will increase by Rs.1675 Cr due to this capacity
expansion.I believe .company’s brands AMARON,QUANTA,POWER STACK,POWER
SLEEK,POWER ZONE ..etc will eat the market share of the main competitor in a
big way once the capacity expansion completed.
Led by a team of rural youth
,Amara Raja always paying much attention to practical wisdom and hard work in
managing and growing their company rather than copy book
style theoretical approach.In last five years its profit grown from Rs.80 Cr to
Rs.286 Cr and the ongoing capacity expansion may take it to a new level.
Company is going to declare its second quarter result on 14th
November.Due to capacity constraints and unfavourable currency movements during
this quarter ,possibility for a temporary blip in performance can’t be ruled out
.If it happens and there is any knee jerk reaction on account of this ,an entry around Rs.280 is
an excellent opportunity for long term investors.
Link to Websites
Disc: I have vested interest in ARB
Hi Dear VP,
ReplyDeleteI just like you to comment on these 2 issues ,
ARBL’s Managing Director Mr. Jayadev Galla’s salary in FY12 was around Rs 17 crore, which was almost 10 times then the salary of big compnies and another thing is Mother of one of the promoters is a minister and is in politics
Thanks .
Bhavdip
If we look into the entire corporate world in India we can see different types of management.Except some family centric cos like Tata Group cos,and professionally managed cos like ITC or L&T ,we can classify as follows in general on the basis of policies regarding management's salary :
Delete1) Management taking higher salary but not looting money from company through fraud accounting practices.
2) Taking low salary and looting crores from the company through different methods.
3) Taking higher salary and at the same time looting money from company.
I think , among these three, first one is far better than others if they are ready to dedicate their full energy for the benefit of the company and reward share holders.
About the second question, it is a product business with good brand visibility and not like real estate or infra development ..etc. I don't think such a business is significantly connected with politics.
Thanks . Ur points are valid as always . Cheers.
DeleteSir,
ReplyDeleteCan your thoughts on your old rec Vesuvius India? There are talks of steel sector revival and this company caters to that industry. Sir for late entrant like me can one buy Vesuvius as CMP?
The company is a steady performer in bad times for steel sector and any revival can help it too.
Sir your thoughts on getting into Infra sector or should one avoid it till elections are over?
thank you
Tarun
Vesuvius is a good stock for genuine long term investors who are not looking into trading screen on a daily basis .
DeleteNormally stock market will discount every factors in advance.
HDFC or HDFC bank ...which is a better buy from 7-8yrs perspective?
ReplyDeleteWould coromandel intl be a good buy at current levels considering merger with LPL?
Whats your view on Sesa sterlite?
Dear ValuePick,
ReplyDeleteI am new to your blog. I reached your blog while researching Marksans. Your research on Marksans is absolutely fantastic.
Request your valued opinion on some scripts.
1> Marksans - Can I buy at CMP of about Rs. 11/=.
2> Hexaware Technologies - can the stock rise post the Barings Open Offer. The stock did not participate much in the later part of the tech rally.
3> Accelya kale - I read that you are not recommending a buy at CMP. However, is it a hold.
4> Castrol India -
My regards.
Priyadarshan
Marksans appreciated about 200% and Accelya Kale appreciated more than 450 % since recommendation.At this rate ,it is up to you and your risk taking capacity .Castrol is a good stock but one should keep an eye on the movement of crude oil price.
DeleteNot tracking Hexaware
Dear sir,
ReplyDeleteYour views on Suven life sciences & Natco pharma?
Suven's performance in September quarter is really stunning.Stock already appreciated about 100 % in recent times, but we can't rule out the possibility of further re-rating.
Deletedear VP,
ReplyDeletePlease tell if i can purchase BRITANNIA at this price with long term view.
thank you.....