Conviction Ideas

Capstocks Equity Research
Company Analysis
3 rd Feb 2016
_____________________________________________________________________________________
Capstocks Research Team

Reiterate Buy
Target
Holding Period
: ` 877
: ` 972
: 2 Months
Conviction Ideas - 198

Amararaja Batteries
COMPANY OVERVIEW:
Amararaja makes batteries for the automotive and industrial segments. It is the second largest
maker of batteries in India, after Exide Industries. The company was incorporated in February
1985 as a private limited company and converted into public in the year 1990. In May 1992, they
designed and implemented the most advanced battery manufacturing facility in India. In 1997
they entered into joint venture agreement with the US battery major Johnson Control Inc. for
importing technology for making automotive batteries. Johnson Control Inc. holds 26% equity
stake in the company. The companys most advanced battery making plant is located at
Karakambadi in Andhra Pradesh. To cater higher demand the company has set up a second
manufacturing plant at Chittoor.
BUSINESS:
The companys product can be classified into automotive and industrial. Industrial product
demands are from telecom, power control, railways, UPS, defense. Key customers include Indus
Towers, Viom Networks, ATC, Bharti Infratel, Bharti Airtel, Vodafone, Aircel, BSNL, Idea
Cellular, Indian Railways, APC, Emerson, Numeric, Delta, DB Power and Schneider. The
industrial batteries are sold under the brand name Amaron Volt ((Telecom networks, data
centres, power stations, oil and gas), Power Stack (Telecom networks, data centres, power
stations, oil and gas, Indian Railways), Quanta (UPS applications) and Power Sleek (Wireless
telecom network, UPS applications). In the automotive segment Company supplies batteries
under OE relationships to Ashok Leyland, General motors, Hindustan Motors, Honda, Mahindra
& Mahindra, Maruti, Hyundai and Tata Motors. Automotive batteries are sold under the brand
name Amaron and PowerZone. Apart from domestic market the companys Industrial and
Automotive batteries are exported to Asia Pacific, Africa and Middle East. Company is gaining
market share in both OEM and replacement segments and products are well accepted by the
market on superior quality and consistent unveiling of new products.
FINANCIAL HIGHLIGHTS:
FY 2013
FY 2014
FY 2015
Net Sales Cr.
2958.1
3436.6
4211.3
Net Profit Cr.
286.7
367.4
410.8
EPS Rs.
20.9
23.3
Book Value Rs.
15.1
62.0
79.7
99.5
Dividend Rs.
2.52
3.23
3.61
____________________________________________________________________________________
Please see the disclaimer at the end
For Private circulation only
1

Company Analysis
3 rd Feb 2016
_____________________________________________________________________________________
IINVESTMENT RATIONALE:
Indias battery market is dominated by two players, Exide and Amararaja. In last six
years the Amararaja performance is consistently improving in both automotive and industrial
segment. The company is growing faster than the industry and market leader Exide and has
become almost 70% to the size of Exide. The company is increasing capacities to cater growing
demand in both automotive and industrial segment. The additional capacities from new plant at
Chittoor has started coming on stream in stages which is helping the company to capitalize on
the growth opportunities available in after market and exports, while being able to address the
OEM requirements in full. Battery is a product which is used in diverse industries and any
slowdown in one segment is compensated by demand in other segment. The company is growing
faster than the industry on addition of new capacities. Recent Q3 FY16 results were better than
our expectation inspite of challenging environment. The company showed good topline growth
with increase in profitability. We expect the upward growth momentum will continue and on
track to achieve Rs.36 EPS for FY17 and if we discount the earnings by 27 times target of 972 is
achievable. Good growth prospects, diversified end product usage, strong cash flows, debt free
balance sheet makes Amararaja a decent buy in current volatile market conditions.
SHAREHOLDING PATTERN
AS ON Sep 2015
PROMOTERS
Indian
Foreign
INSTITUTIONS
FII
Mutual Funds
NON-INSTITUTIONS
Bodies Corporate
Public
26.06
26.00
20.23
8.70
STOCKS DETAILS
.
NSE SYMBOL
AMARAJABAT
FACE VALUE Rs.
EPS Rs.
23.3
MARKET PRICE Rs.
877
2.62
16.39
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2

Company Analysis
3 rd Feb 2016
_____________________________________________________________________________________
P revious Conviction Ideas:

Sl.
No.
Company Name
197
196
195
194
193
192
191
190
189
188
187
186
185
184
183
182
181
180
179
178
177
176
175
174
173
172
171
170
169
168
167
166
165
164
163
162
161
160
159
158
157
Tourism Finance Corp

Zensar Tech
GIPCL
Torrent Power
NEULANDLAB
Nilkamal
Indraprastha Gas
BANCOINDIA
SQS BFSI
Tinplate
Intellect Design
Canfin Homes
Jamna Auto
IL&FS Investment
PNB Gilts
Inox Leisure
Garware Wallropes
Sonata Software
Biocon
FDC
Dewan Housing
JK Tyre
Zensar Tech
Ceat
DCB Bank
Jamna Auto
Accelya Kale
Cholamandalam Fin
FDC
Man Industries
Canfin Homes
Navin Fluorine
Man Infraconst
Garware Wallropes
Canfin Homes
Emerging Stocks
Claris Life
Infinite Computers
TV Today
Recommendation
Date & Price
27-Jan-16
20-Jan-16
13-Jan-15
6-Jan-16
23-Dec-15
17-Dec-15
9-Dec-15
2-Dec-15
26-Nov-15
18-Nov-15
4-Nov-15
28-Oct-15
21-Oct-15
14-Oct-15
7-Oct-15
30-Sep-15
23-Sep-15
16-Sep-15
9-Sep-15
2-Sep-15
19-Aug-15
12-Aug-15
5-Aug-15
29-Jul-15
22-Jul-15
15-Jul-15
8-Jul-15
1-Jul-15
24-Jun-15
10-Jun-15
3-Jun-15
27-May-15
13-May-15
29-Apr-15
15-Apr-15
8-Apr-15
1-Apr-15
25-Mar-15
18-Mar-15
11-Mar-15
25-Feb-15
Target
Price
` 50
` 66
` 836
` 920
` 91
` 108
` 201
` 235
` 838
` 975
` 1025
` 1185
` 459
` 524
` 136
` 159
` 58.5
` 66
` 805
` 920
` 69.7
` 80
` 215
` 265
` 1002
` 1150
` 119
` 130
` 18.4
` 23
` 27
` 32
` 47
` 59
` 227
` 265
` 281
` 345
` 138
` 160
` 480
` 560
` 190
` 220
` 266
` 295
` 108
` 132
` 795
` 920
` 720
` 830
` 130
` 160
` 102
` 130
` 1040
` 1150
` 600
` 690
` 153
` 178
` 67
` 80
` 695
` 790
`837
` 950
` 46
` 52
` 188
` 218
` 615
` 720
Na
` 279
Na
` 350
` 222
` 290
` 245
` 290
CMP
46.55
859.65
83
232.85
709.95
1272.25
557.65
120.3
46.55
874.8
68.95
217.1
1005.55
138.6
17.6
24.1
46.55
215.4
342.2
154.35
462.7
192
183.4
86.85
859.65
904.3
75.45
138.6
915.05
653.85
192
65.05
1005.55
1572.9
35.5
342.2
1005.55
Na
206
211.6
281.8
Status
Target Achieved
Target Achieved
Target Achieved
Target Achieved
Target Achieved
Target Achieved
Target Achieved
Target Achieved
Target Achieved
Target Achieved
Target Achieved
Target Achieved
Target Achieved
Target Achieved
Target Achieved
Target Achieved
Target Achieved
Target Achieved
Target Achieved
Target Achieved
Target Achieved
Target Achieved
Target Achieved
Target Achieved
Target Achieved
Target Achieved
Target Achieved
Target Achieved
____________________________________________________________________________________
3

Company Analysis
3 rd Feb 2016
_____________________________________________________________________________________
156
155
154
153
152
151
150
149
148
147
146
145
144
143
142
141
140
139
138
137
136
135
134
133
132
131
130
129
128
127
126
125
124
123
122
121
120
119
118
117
116
115
114
113
JM Financial
SQS BFSI
SKF India
Nilkamal
Tata Motors
Castrol India
Federal Bank
Zensar Tech
JM Financials
Canfin Homes
Bharat Electronics
Tata Coffee
Centum
PNB Gilts
Sanghi Industries
Canfin Homes
LG Balakrishnan
Castrol India
Garware Wallropes
V-Mart
Amararaja Batteries
Gujarat Alkalies
Hindustan Zinc
Aarti Industries
Nilkamal
Zensar Tech
JK Tyre
M&M Financials
JMC Projects
LG Balakrishnan
Amararaja Batteries
Atul
Canfin Homes
TVS Srichakra
Styrolution ABS
SKF India
Cox & Kings
Crompton Greaves
LG Balakrishnan
TV Today
Accelya Kale
NIIT Tech
JK Tyre
Gujarat Pipavav
18-Feb-15
11-Feb-15
28-Jan-15
21-Jan-15
14-Jan-15
7-Jan-15
25-Dec-14
18-Dec-14
11-Dec-14
3-Dec-14
26-Nov-14
20-Nov-14
12-Nov-14
5-Nov-14
15-Oct-14
8-Oct-14
1-Oct-14
24-Sep-14
10-Sep-14
27-Aug-14
13-Aug-14
30-Jul-14
23-Jul-14
16-Jul-14
2-Jul-14
25-Jun-14
11-Jun-14
28-May-14
21-May-14
7-May-14
30-Apr-14
23-Apr-14
16-Apr-14
2-Apr-14
25-Mar-14
19-Mar-14
12-Mar-14
5-Mar-14
19-Feb-14
12-Feb-14
29-Jan-14
22-Jan-14
15-Jan-14
8-Jan-14
` 55
` 64
` 574
` 645
` 1434
` 1650
` 464
` 545
` 523
` 590
` 521
` 590
` 73
` 85
` 585
` 690
` 50
` 57
` 500
` 575
` 766
` 883
` 98
` 115
` 558
` 675
` 25.3
` 32
` 61
` 75
` 452
` 520
` 704
` 790
` 434
` 490
` 180
` 218
` 432
` 490
` 532
` 625
` 201
` 245
` 169
` 195
` 204
` 245
` 392
` 475
` 415
` 476
` 56
` 65
` 304
` 352
` 149
` 185
` 233
` 263
` 422
` 490
` 520
` 590
` 240
` 280
` 304
` 345
` 475
` 555
` 795
` 890
` 152
` 175
` 134
` 150
` 163
` 187
` 113
` 140
` 750
` 845
` 413
` 475
` 33.4
` 38.8
` 63
` 72
38.9
874.8
1151.9
1272.25
320.3
408.25
46.05
859.65
38.9
1005.55
1216
93.25
616
24.1
51.95
1005.55
461.75
408.25
342.2
571.15
864.2
179.5
154.85
461
1272.25
859.65
86.85
199.65
211.75
461.75
864.2
1454.45
1005.55
2472.3
670.75
1151.9
210.7
130.9
461.75
281.8
915.05
539.3
86.85
147.8
Target Achieved
Target Achieved
Target Achieved
Target Achieved
Target Achieved
Target Achieved
Target Achieved
Target Achieved
Target Achieved
Target Achieved
Target Achieved
Target Achieved
Target Achieved
Target Achieved
Target Achieved
Target Achieved
Target Achieved
Target Achieved
Target Achieved
Target Achieved
Target Achieved
Target Achieved
Target Achieved
Target Achieved
Target Achieved
Target Achieved
Target Achieved
Target Achieved
Target Achieved
Target Achieved
Target Achieved
Target Achieved
Target Achieved
Target Achieved
Target Achieved
Target Achieved
____________________________________________________________________________________
4

Company Analysis
3 rd Feb 2016
_____________________________________________________________________________________
112
111
110
109
108
107
106
105
104
103
102
101
99
98
97
96
95
94
93
92
91
90
89
88
87
86
85
84
83
82
81
79
78
76
75
74
73
72
71
70
69
68
67
66
NIIT Ltd
V-Mart
Atul
FDC
TVS Motor
Gujrat Gas
Cyient
Tata Steel
VST Tillers
Avanti Feeds
Amararaja Batteries
Alembic Pharma
Gujrat Gas
Atul
Bajaj Corp
Biocon
Indraprastha Gas
Accelya Kale
Avanti Feeds
Hindalco
Pfizer
Avanti Feeds
Amararaja Batteries
Sundaram Finance
NDTV
JK Tyre
Jammu & Kashmir
JK Lakshmi
Bajaj Corp
ITC
GIPCL
Yes bank
Chettinad Cement
ABirla Nuvo
JB Chemicals
Vijaya Bank
NMDC
HIL Limited
Tata Motor DVR
LIC Housing
Gujarat Alkalies
Texmaco Rail
Bajaj Auto
Sundaram Finance
1-Jan-13
26-Dec-13
4-Dec-13
27-Nov-13
20-Nov-13
13-Nov-13
6-Nov-13
23-Oct-13
9-Oct-13
3-Oct-13
18-Sep-13
11-Sep-13
21-Aug-13
14-Aug-13
7-Aug-13
31-Jul-13
17-Jul-13
10-Jul-13
3-Jul-13
26-Jun-13
12-Jun-13
5-Jun-13
29-May-13
22-May-13
15-May-13
9-May-13
2-May-13
17-Apr-13
3-Apr-13
13-Mar-13
6-Mar-13
13-Feb-13
6-Feb-13
23-Jan-13
16-Jan-13
9-Jan-13
2-Jan-13
26-Dec-12
19-Dec-12
12-Dec-12
3-Dec-12
29-Nov-12
22-Nov-12
15-Nov-12
` 28
` 36
` 220
` 260
` 430
` 475
` 101
` 118
` 50.3
` 58
` 289
` 330
` 250
` 285
` 335
` 390
` 460
` 536
` 45
` 52
` 297
` 345
` 141
` 162
` 207
` 237
` 313
` 360
` 245
` 276
` 318
` 375
` 305
` 345
` 557
` 625
` 32
` 37
` 97
` 112
` 1061
` 1220
` 26
` 31
` 274
` 305
` 560
` 650
` 93
` 110
` 23.2
` 27
` 137
` 152
` 90
` 104
` 243
` 275
` 300
` 330
` 71
` 82
` 522
` 575
` 910
` 1090
` 1170
` 1290
` 90
` 104
` 66
` 77
` 170
` 196
` 490
` 575
` 174
` 195
` 274
` 314
` 141
` 171
` 64
` 74
` 1830
` 2050
` 480
` 575
78.65
571.15
1454.45
192
287.75
508.65
412.2
224
1478.15
413.3
864.2
629.9
508.65
1454.45
389.55
462.7
557.65
915.05
413.3
66.65
2233.95
413.3
864.2
1313.95
92.75
86.85
69.5
273.15
389.55
321.95
83
777.7
710
828.8
268.2
29.8
77.6
535.15
243
442.8
179.5
138.95
2347.65
1313.95
Target Achieved
Target Achieved
Target Achieved
Target Achieved
Target Achieved
Target Achieved
Target Achieved
Target Achieved
Target Achieved
Target Achieved
Target Achieved
Target Achieved
Target Achieved
Target Achieved
Target Achieved
Target Achieved
Target Achieved
Target Achieved
Target Achieved
Target Achieved
Target Achieved
Target Achieved
Target Achieved
Target Achieved
Target Achieved
Target Achieved
Target Achieved
Target Achieved
Target Achieved
Target Achieved
Target Achieved
Target Achieved
Booked Loss
Target Achieved
Target Achieved
Target Achieved
Target Achieved
Target Achieved
Target Achieved
Target Achieved
Target Achieved
Target Achieved
Target Achieved
____________________________________________________________________________________
5

Company Analysis
3 rd Feb 2016
_____________________________________________________________________________________
65
64
63
62
61
60
58
57
56
55
54
53
52
51
49
48
47
46
45
44
43
42
41
40
39
38
37
36
35
34
33
32
31
30
29
28
27
26
25
24
23
22
21
20
IDFC*
Karur Vysya Bank
JB Chemicals
Cairn India
Zensar Tech
Bajaj Corp
JK Tyre
Accelya Kale Solution
Goodricke Group
Orient Paper
Ceat
Venkys
Tata Sponge *
Cera Sanitaryware
Mangalam Cement
Alembic Pharma
IDFC*
FDC
Force Motor
Chettinad Cement
Automobile Corp
Everest Industries
Goodricke Group
Amararaja Batteries
HSIL Limited
Goodyear Tyres
Gateway Distriparks
Sundaram Finance
Raymond
HIL Limited
Cera Sanitaryware
Zensar Tech
NIIT Tech
Fag Bearings
Escorts
Oracle Financial
Tata Motors
Zensar Tech
Manglore chemicals
Amararaja Batteries
LIC Housing
Raymond
Grindwell Norton
FDC
31-Oct-12
10-Oct-12
3-Oct-12
26-Sep-12
12-Sep-12
5-Sep-12
22-Aug-12
16-Aug-12
8-Aug-12
1-Aug-12
25-Jul-12
18-Jul-12
11-Jul-12
4-Jul-12
20-Jun-12
13-Jun-12
6-Jun-12
30-May-12
23-May-12
16-May-12
9-May-12
2-May-12
24-Apr-12
18-Apr-12
11-Apr-12
4-Apr-12
28-Mar-12
21-Mar-12
14-Mar-12
29-Feb-12
22-Feb-12
15-Feb-12
9-Feb-12
1-Feb-12
25-Jan-12
18-Jan-12
11-Jan-12
5-Jan-12
30-Nov-11
17-Nov-11
2-Nov-11
20-Oct-11
12-Oct-11
5-Oct-11
` 161
` 180
` 433
` 495
` 75
` 90
` 335
` 375
` 270
` 305
` 185
` 220
` 23.2
` 25.6
` 168
` 192
` 145
` 175
` 64*
` 78
` 96
` 114
` 458
` 520
` 339
` 375
` 287
` 330
` 122
` 152
` 52
` 62
` 126
` 153
` 81
` 95
` 458
` 550
` 700
` 875
` 350
` 425
` 160
` 205
` 155
` 175
` 158
` 188
` 165
` 205
` 365
` 440
` 150
` 180
` 320
` 363
` 400
` 460
` 345
` 420
` 219
` 260
` 181
` 215
` 240
` 310
` 1199
` 1430
` 84
` 102
` 2020
` 2280
` 205
` 240
` 135
` 165
` 33
` 40
` 112
` 130
` 235
` 275
` 356
` 415
` 235
` 268
` 89
` 106
40.4
456.1
268.2
116
859.65
389.55
86.85
915.05
241
38.45
904.3
289.5
388.9
1707.55
185.75
629.9
40.4
192
3380
710
408
222.55
241
864.2
270.8
579
271.65
1313.95
391.25
535.15
1707.55
859.65
539.3
3894.9
127.25
3637.8
320.3
859.65
39.65
864.2
442.8
391.25
672.4
192
Target Achieved
Target Achieved
Target Achieved
Target Achieved
Target Achieved
Target Achieved
Target Achieved
Target Achieved
Target Achieved
Target Achieved
Target Achieved
Target Achieved
Target Achieved
Target Achieved
Target Achieved
Target Achieved
Target Achieved
Target Achieved
Target Achieved
Target Achieved
Target Achieved
Target Achieved
Target Achieved
Target Achieved
Target Achieved
Target Achieved
Target Achieved
Target Achieved
Target Achieved
Target Achieved
Target Achieved
Target Achieved
Target Achieved
Target Achieved
Target Achieved
Target Achieved
Target Achieved
Target Achieved
Target Achieved
Target Achieved
Target Achieved
Target Achieved
Target Achieved
Target Achieved
____________________________________________________________________________________
6

Company Analysis
3 rd Feb 2016
_____________________________________________________________________________________
19
18
17
16
15
14
13
12
11
10
9
8
7
6
5
4
3
2
1
Biocon
United Phosphorus
GIPCL
Ashok Leyland
Gateway Distriparks
Balmer Lawrie
Wyeth
LG Balakrishnan
CRISIL
ITC
Sundaram Finance
Yes Bank
Goodyear Tyres
IDFC*
City Union Bank
Styrolution ABS
Indraprastha Gas
GMDC
Amararaja Batteries
28-Sep-11
21-Sep-11
14-Sep-11
7-Sep-11
24-Aug-11
17-Aug-11
10-Aug-11
3-Aug-11
27-Jul-11
20-Jul-11
13-Jul-11
6-Jul-11
29-Jun-11
22-Jun-11
15-Jun-11
8-Jun-11
1-Jun-11
25-May-11
18-May-11
` 345
` 385
` 155
` 179
` 76
` 86
` 27
` 32
` 130
` 150
` 377
` 428
` 1016
` 1150
` 145
` 170
` 870
` 960
` 205
` 226
` 276
` 320
` 325
` 374
` 322
` 396
` 122
` 154
` 45
` 54
` 595
` 690
` 342
` 409
` 138
` 180
` 104
` 128
462.7
409.1
83
86.85
271.65
559
NA
461.75
1871.5
321.95
1313.95
777.7
579
40.4
81.45
670.75
557.65
61.6
864.2
Target Achieved
Target Achieved
Target Achieved
Target Achieved
Target Achieved
Target Achieved
Target Achieved
Target Achieved
Target Achieved
Target Achieved
Target Achieved
Target Achieved
Target Achieved
Target Achieved
Target Achieved
Target Achieved
Target Achieved
Target Achieved
Target Achieved
Tata Sponge adjusted buy price post open offer is 285

Model Portfolio was given in Conviction Idea 50 , 59 ,77 ,80
* 55 Demerged
Some stocks have achieved target after the holding period mentioned in our report
Prepared By:
Capstocks Research Team
Capstocks & Securities (India) Pvt. Ltd
Tel: 0471-4093361 | E-mail: research@capstocksindia.com
www.capstocks.com
____________________________________________________________________________________
7

Company Analysis
3 rd Feb 2016
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Disclaimer:
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Stock Exchange of India Limited, Bombay Stock Exchange Limited and MCX Stock Exchange Limited. Capstocks
registered as a Depository Participant with CDSL, Portfolio Manager with SEBI, and Mutual Fund Distributor with
AMFI. Capstocks has made an application with SEBI for registering as a Research Entity in terms of SEBI
(Research Analyst) Regulations, 2014.
This document is solely for the personal information of the recipient, and must not be singularly used as the basis of
any investment decision. Nothing in this document should be construed as investment or financial advice. Each
recipient of this document should make such investigations as they deem necessary to arrive at an independent
evaluation of an investment in the securities of the companies referred to in this document (including the merits and
risks involved), and should consult their own advisors to determine the merits and risks of such an investment.
The information in this document has been printed on the basis of publicly available information, internal data and
other reliable sources believed to be true, but we do not represent that it is accurate or complete and it should not be
relied on as such, as this document is for general guidance only. Capstocks or any of its affiliates/ group companies
shall not be in any way responsible for any loss or damage that may arise to any person from any inadvertent error in
the information contained in this report.
Disclosure:
I, Karthic Babu T.R.S, hereby certify that all of the views expressed in this research report accurately reflect my
views about the subject issuer(s) or securities. I also certify that no part of our compensation was, is, or will be
directly or indirectly related to the specific recommendation(s) or view(s) in this report.
Research Analyst or his/her relative or Capstocks does not have financial interest in the subject company. Also
Research Analyst or his relative or Capstocks or its Associate do not have beneficial ownership of 1% or more in the
subject company at the end of the month immediately preceding the date of publication of the Research Report.
Further Research Analyst or his relative or Capstocks or its associate does not have any material conflict of interest.
Capstocks / Analyst has not served as an officer, director or employee of company covered by Analyst and has not
been engaged in market making activity of the company covered by Analyst.
Any holding in stock Yes.
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