Sales growth(YOY)

Net Profit(YOY)
Net profit/ Sales
Return on Net Worth(10 yr avg)
ROE (5 yr avg)
ROE (past 2 yr)
Average Dividend Payout(% of PAT)
cogs (% sales)
sales performance

Auto

Industrial
submarine
Export
Investment Buy / Sell( Share)

Indebtedness
% increase in avg median salary of employees
Stock price increase
PE ratio
Inventory days
Revenue from operations(10 yr avg)
Revenue from operations(yoy)
Sales growth(10 yr avg)
Raw materials % of sales
PBT(10 yr avg)
PAT(10 yr avg)
PAT (yoy)
PAT margin
(Increase) decrease in working capital
Non Trade (unquoted)
Share of revenue from non core business

NOTES:
Capital allocation in core business has been infrequent and low as although both plant at running a

The growth of Amara raja in Organised sector(Auto, Infrastructure, Power) has been phenomenal w

Exide
19
21
8.1
26
19
15
40
39

Sales of Automotive Batteries had a growth rate of 4.3% by volume in 2015-16 as compared to the
aftermarket sales of four wheeler batteries witnessed an overall growth of 10% in units from the pr
wheelers aftermarket, the growth rate during the year was nearly 14%. Sale of batteries in the four
however lower by about 2% in units during the year. In the OEM two wheelers, the Company witne
sales as compared to that of previous year.

Company was successful in registering double digit growth

Sale of Submarine Batteries for the FY 2015-2016 recorded an impressive growth rate of about 42%

Despite a gloomy Global Automotive outlook, our export of Automotive Batteries registered a marg
value compared to the previous year, primarily through consolidation in the existing markets. The e
Home UPS and Solar Systems recorded a volume growth of around 6.5% over the previous year.
LIC - 6456588 ( Buyl)
New India Assurance Company - 2621441 ( Buy)
Govt Pension Fund Global - 989674 ( Sell)
ICICI Prudential - 3611854 (Buy)

1027648951
12
21
24
63
15
-0.81
15
60
10
16
14
9
578.95
Infused 150 cr in the business( Exide life insurance compnay limited)
25

as although both plant at running at 85% capacity, Amara raja is building up capacity to about 3 million in 4

ure, Power) has been phenomenal with yoy of 23-24%. The company has presence in the ratio of 1/3 and 2/3

Amara Raja
31
37
10
27
24
26
15
52
four-wheelers 21% and in two-wheelers we by around 20%

double digit growthin telecom and flat growth in ups and inverters
No presence
Export sales stunted around 1-2%

Franklin Templeton MF - 888620 ( Sell)

ICICI Prudential - 200000 ( Sell)
Franklin Templeton Investment Fund - 289291 ( Buy)
HDFC Mutual fund - 1812300 ( Sell)
Dr upendranath N - 9009620 (Sell)
Copthall Mauritius - 1381384 ( Sell)
741388000
10.57
4
34
42
24
11.3
25.76
58
14
29
19
10
-677.41
No such case
No such case

lop capacity upto 25 million in 2 W from current capacity of 8 million

ment market. It maintains that ratio at about 2-3% margin. With the replacement market growth about 8-9% a

amara raja earns twice roe

No major investment into business
smelting units

Numbers are good for exide as it is continuously coming down on behalf of its smelting plant that r

Generally stronger presence in automotive sector whereas Amara Raja is in replacement sector, so
Margin improved considerably from 7 percent for exide and from 9 percent for Amara Raja
This was basically due to increae in Inventory in Amara Raja due to low demand in replacement

et growth about 8-9% and the the Auto sector growth at 7-8% in FY 16 suggests major growth coming from T

Investment about 150 Cr in life insurance business

Dedicated units to renew scrap lead helping in cot optimization

industry structure

Business

Revenue Mix

clients(auto)
industrial
submarine
Moat- Technical Partners
Dealership and Touch points
Potential Risks
Economic Risks

Operational Risk
Financial Risk
IR/ Promoter issue

CAPEX

Investment Rationale
Valuation(DCF)
Current Price
PE
Recommendations

Rationale: Upon comparison Amara Raja stands put as a winner in the long run. It is evident from its in

Exide

Lead Acid Battery industry: CAGR of 16.5% by 2020. The automotive and communications sector account for 90
The demand for the automotive start-stop battery and energy storage battery is expected to present a CAGR of
Inverter & UPS Market: Indias Inverters and UPS Market is expected to reach Rs 43,200.7 million by 2019 driven
low availability of high quality power, expansion of industries and increasing affordability of consumers.
Power: The Government of Indias ambitious targets of adding 175 GW of renewable energy and heavy investme
attract private and government sector investments of nearly USD 50 billion over the next four years.
Telecom:The advent of the fifth generation mobile networks (5G), though still in a nascent stage, is expected to

Exide Industries (EXIDE) is the largest lead acid battery manufacturer in India with market leadership
revenues from auto segment, while balance comprises industrial revenues. The company has also rec

all major oems

legrand, emerson, schneider electric, indus towers, bsnl, bhel, voltas, larsen and toubro, godrej, riello,
country's only company authorised, capable of manufacturing submarine batteries foor russian, french
Technical collaboration with shin kobe electric machinery, furukawa electric group, east penn
Robust network of distributors and dealors (15500 dealers,14250 tertiary distribution network through

Downturn in the Economy - A bit higher exposure in Auto market has made its performance dependen
its cost due to less exposure in replacement manrket

Inflation could raise operational costs, affecting business profitability - Purchase dsmelting plants to re
where despite increase in lead prices in 2nd half of FY 16 and lead cost comprise more than 70% of th
No such issue as the companies are Debt free
The company invested 150 cr in the Insurance business. This is poor reflection of management policy

Planned Capital Expenditure of over Rs. 1,400 crore for technology up-gradation, making the organisa
grid technology, an advanced technology for batteries, would be for the first time in India. Aiming to r
500-600 crore, for implementing this technology.
For the technology up-gradation, the company has tied up with leading US-based lead-acid batteries m
providing the knowhow, technical assistance and support for the punch grid technology. Punched batt
consistent grids, in turn providing better life and reducing warranty cost of the battery in both automo

Upturn in Domestic Automobile sales, Exide being the majority player with about 60 % of Business is g
Investment in chloride plants hashelped it to reduce its exposure to import lead prices.
Technical collaboration with international players

199

Buy(as DCF is based on certain assumptions that lead to errors)

n Amara Raja stands put as a winner in the long run. It is evident from its increase in market share. But, the com

Amara Raja

AGR of around 25%-30%(Driven by the increasing vehicle density in the country).

bution network are leading to a robust electricity market. According to projected estimates from the Ministry of Power, the

y and less latency. Telecommunication Equipment Manufacturers and service providers are gearing themselves for the next

It is the second largest manufacturer (after Exide) of valve-regulated lead-acid batteries (VRLA; also k

Strong presence in 4W basically in CVs, exclusive supplier of maruti suzuki swift and daimler benz
All the same for amara raja
Joint venture with Johnsson Control(USA)
30000 strong franchise based distributer network for replacement market

Downturn in the Economy - The Company caters to a number of user sectors which has created multip
strong relations with customers in various user sectors, which de-risks the Company from an overexpo
Inflation could raise operational costs, affecting business profitability - Replacement market depends
adjusted as per cost
No such issue as the companies are Debt free
No issue

The Company has plans to invest about 4500 Cr to build capacity for capturing the Tubulr battery mar
well as 4 Wheeler capacity
Tubular battery- 1.5 million, 0.9 in this fiscal and 0.5 in FY 18
2 Wheeler - From 8.5 million to 25 million in four stages panning over next three years
4 Wheeler - From 8 million to 11.5 million, this has been achieved
The company was previously selling bought out Tubular batteries, but noe it wants to develop its own
coming years owing to increase in the number of portable installations of towers in urban area

Strong presence in replacement market and good customer feedback on battery quality and life as we
Increasing share in Auto OEM market from about 16% in FY 11 to 31% in FY 16
Diversified portfolio as well as better product mix

HOLD

ock and invest in Exide whose current price is below par as a reflection of its performance in last 2 years.

Automotive
Industrial

55
45

Automotive
Industrial

64
36

Domestic
Export

Telecom
40
UPS
23
Automotive
60
Replacement( Auto)

56
41
40
38

Amara Raja 2-Stage DC

(All figures, except per share numbers, are in Rs million)

(Figures in "red" are entered figures. Rest is all calculati
5-Year Avg. FCF
Years:
Growth Rate:
Terminal Growth Rate:
Discount Rate:
Shares Outstanding (Nos.):
Net Debt Level:
Year
1
2
3
4
5
6
7
8
9
10

Terminal Year CF:

PV of Year 1-10 Cash Flows:
Terminal Value:
Total PV of Cash Flows:
Intrinsic Value per Share (IV):

aja 2-Stage DCF Calculation

mbers, are in Rs million)

res. Rest is all calculation)
4,219,066,666.67
1-5
36%
3%
14%
850,000,000
FCF
5,743,498,596
7,818,737,822
10,643,801,877
14,489,617,246
19,725,001,495
21,697,501,644
23,867,251,809
26,253,976,989
28,879,374,688
31,767,312,157

6-10
10%

Growth
36%
36%
36%
36%
36%
10%
10%
10%
10%
10%

32,720,331,522
84,374,154,600
84,456,332,521
168,830,487,121

199

ulation

Net Debt = Long Term Borrowings - Cash

Present Value (PV)
5,050,774,739
6,046,438,106
7,238,377,408
8,665,284,683
10,373,479,360
10,034,566,440
9,706,726,175
9,389,596,811
9,082,828,410
8,786,082,468

PV = Present Value

gs - Cash

10 year Operating Cash Flow

Discount Rate Calculation: (Using WACC Model)

Since the company is debt free, so cost of capital is assu
For Calculation of cost of Equity, I have used CAPM mode
Beta is take as long term as
Risk free return is taken as 10 year govt bond yield as
Market rate of return is taken as
So, Cost of Equity

Now, the growth rate of the company is taken as the las

I have assumed it to be about 15% for first 5 years and t
The terminal year afterwards growth rate is assumed at

Capital Expenditure
423.39
331.51
157.89
172
210
291

264.30

0.96
6.88
14
13.7152

7.12
6.8352

421.91

13.7152

0.3613197064

421,906,666.67

Amara Raja 2-Stage DC

(All figures, except per share numbers, are in Rs million)

(Figures in "red" are entered figures. Rest is all calculati
10-Year Avg. FCF
Years:
Growth Rate:
Terminal Growth Rate:
Discount Rate:
Shares Outstanding (Nos.):
Net Debt Level:
Year
1
2
3
4
5
6
7
8
9
10

Terminal Year CF:

PV of Year 1-10 Cash Flows:
Terminal Value:
Total PV of Cash Flows:
Intrinsic Value per Share (IV):

aja 2-Stage DCF Calculation

mbers, are in Rs million)

res. Rest is all calculation)
5928181818.18182
1-5
15%
3%
12%
170,810,000
FCF
6,817,409,091
7,840,020,455
9,016,023,523
10,368,427,051
11,923,691,109
13,116,060,220
14,427,666,242
15,870,432,866
17,457,476,152
19,203,223,768

6-10
10%

Growth
15%
15%
15%
15%
15%
10%
10%
10%
10%
10%

19,779,320,481
65,033,150,465
74,750,236,513
139,783,386,978

818

ulation

Net Debt = Long Term Borrowings - Cash

Present Value (PV)
6,101,751,717
6,280,403,530
6,464,286,048
6,653,552,422
6,848,360,283
6,742,399,189
6,638,077,576
6,535,370,076
6,434,251,716
6,334,697,907

PV = Present Value

gs - Cash

10 year Operating Cash Flow

Discount Rate Calculation: (Using WACC Model)

Since the company is debt free, so cost of capital is assu
For Calculation of cost of Equity, I have used CAPM mode
Beta is take as long term as
Rsik free return is taken as 10 year govt bond yield as
Market rate of return is taken as
So, Cost of Equity

Now, the growth rate of the company is taken as the las

growth rate
I have assumed it to be about 15% for first 5 years and t
The terminal year afterwards growth rate is assumed at

Capital Expenditure
5,171.00
4063
3303
724
865
517
518
684
1290
4553
3303
2,271.91

0.681
6.88
14
11.72872

592.82

7.12
4.84872
11.72872

0.1676557889

592,818,181.82