Shares of this EV company jumped up to 8 percent in Thursday’s trading session after a well-known Domestic Brokerage gave a ‘Buy’ call on the company’s stock with a potential upside of more than 20 percent. In the past six months, the company’s stock has gained more than 50 percent for its stakeholders.
With a market capitalization of Rs 18,174.42 crores, the stocks of Amara Raja Energy & Mobility Limited opened their trading hour on Thursday at Rs 975 and closed the session at Rs 993.
The company’s scrip witnessed an intra-day high price, also marked as the company’s fresh 52-week high price, of Rs 1051.35, gaining approximately 8 percent compared to the previous close of Rs 968.50 apiece.
Such bullish share price movements were observed after ICICI Direct, one of the well-known Domestic Brokerages in India, gave a ‘Buy’ call on the stocks of Amara Raja Energy & Mobility Limited.
The Brokerage gave a target price on the company’s stock which stood at Rs 1,200 and the same represents a potential upside of around 21 percent compared to the prevailing share price level.
The Brokerage expects steady growth in its ‘Lead Acid’ business, export numbers, and aftermarket business foreseeing the present population of vehicles and healthy OEM sales volumes over FY22-24.
Moreover, the Brokerage is bullish on Amara Raja’s steady entry into the “New Energy” space (Li-0n battery) and took steps towards the same by entering into an MoU with the Govt of Telangana for setting up a Li-Ion Battery Gigafactory. The overall investment in the new energy business is pegged at approximately Rs 9,500 crores over the next ten years.
During the recent financial quarters, the company’s prime business indicators, viz, its operating revenues as well as after-tax profits, witnessed positive movements.
The former increased from Rs 2,811 crores during Q2FY24 to Rs 2,881 crores during Q3FY24, and the latter, keeping the timeframe the same, rose from Rs 214 crores to Rs 240 crores.
In addition to the above, the company’s ratio analysis portrays its return ratios, viz, the return on equity (RoE) as well as the return on capital employed (RoCE), exhibited a jump in the numbers. The RoE increased from 11.25 percent during FY21-22 to 13.10 percent during FY22-23, and the RoCE, during the same period, rose from 14.56 percent to 17.92 percent.
Incorporated in 1985, Amara Raja Energy & Mobility Ltd Formerly Amara Raja Batteries Ltd is an India-based battery maker that operates through two divisions. The automotive battery division manufactures automotive batteries under the brand names Amaron and Powerzone and serves both the replacement market and original equipment manufacturers.
Written by Amit Madnani
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