Motilal Oswal Sets Price Target for Amara Raja at Rs 878
Amara Raja's Financial Performance Aligns with Expectations, but Li-ion Initiative Raises Concerns
Amara Raja, a leading company in the automotive and industrial battery sector, has recently released its 4QFY26 Adj PAT, which stood at INR1.8 billion. This figure aligns with the estimates provided by Motilal Oswal's research report, indicating a stable financial performance for the company.
In an effort to mitigate the impact of rising input costs, Amara Raja has implemented a 5-6% price hike in its lead acid business. However, this move may lead to near-term margin pressure due to the significant surge in input costs. Moreover, while the market is optimistic about the company's Li-ion initiative, Motilal Oswal's research report expresses caution regarding its potential returns.
Valuation and Recommendations
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The stock of Amara Raja is currently trading at around 20.9x FY27E EPS and 17x FY28E EPS, which suggests that it appears fairly valued. Motilal Oswal's research report reiterates its Neutral rating for the stock, with a Target Price of INR878. This valuation is based on a standalone FY28E EPS of 15x and the INR92/sh value of the investment in the New Energy business.
| Valuation Multiple | FY27E | FY28E |
|---|---|---|
| Current Price | 20.9x | 17x |
| Motilal Oswal's Target Price |
Note: The table above highlights the valuation multiples of Amara Raja's stock as per Motilal Oswal's research report.
Investor Takeaway
The stock of Amara Raja appears fairly valued.
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