Amara Raja Batteries drops almost 10 per cent on Q2FY16 results

Amara Raja Batteries (ARBL) recently declared its Q2FY16 result. ARBL's revenue increased by 8.7 per cent to Rs 1158 crore in Q2FY16 as compared to same period in the previous financial year. The company's total expenditure increased by 9.01 per cent to Rs 960 crore in Q2FY16 on yearly basis. Its total expenditure increased mainly because of 23.41 per cent increment in other expense and 20.75 per cent increment in employee cost during the quarter. However, ARBL's raw material cost reduced by 3.55 per cent to Rs 644 crore in Q2FY16 on yearly basis as the company witnessed soft led prices.

ARBL's EBITDA increased by 7.21 per cent to Rs 198.69 crore in Q2FY16 as compared to same period in previous fiscal year. However, the company's EBITDA margin contracted by 24 basis points to 17.15 per cent in Q2FY16 on yearly basis because higher other expenses and staff costs. It’s EBIT too increased by 10.57 per cent to Rs 164.4 crore in Q2FY16 on yearly basis as depreciation expense reduced by 6.41 per cent to Rs 34.29 crore during the quarter. ARBL's PAT also rose by 22.2 per cent to Rs 122.57 crore in Q2FY16 as compared to same period in previous financial year. The company's PAT margin expanded by 117 basis points to 10.58 per cent in Q2FY16 on yearly basis.

ARBL witnessed growth because of the demand for automobile battery replacements. Automobile battery brands Amaron and Powerzone also sold well. According to the company, demand from original equipment manufacturers and sales in the aftermarket helped company outpace the industry growth in both four and two-wheeler segments.

ARBL's shareholding pattern indicates that FII holdings expanded by 661 basis points to 20.24 per cent while DII holdings contracted by 566 basis points to 8.72 per cent in September 2015 quarter. The share price of the company declined by 6.35 per cent on bourses to Rs 915 on October 28,2015. Today, the share price also declined by 3.03 per cent on bourses and is trading at Rs 893 on intraday basis.

ARBL is in the business of manufacture and sale of lead acid storage batteries for industrial and automotive applications. The Company's products are supplied to various user segments viz. telecom, railways, power control and uninterruptible power supply (UPS) under industrial battery business, and to automobile original equipment manufacturers (OEMs), replacement market and private label customers under automotive battery business. It also exports its standby valve regulated lead acid (VRLA) battery products to various countries in the Indian Ocean Rim. ARBL also provides installation and commissioning, and maintenance services to the customers. The automotive and industrial battery brands of the Company are Amaron, PowerZone, Power Stack, Amaron Volt and Quanta. The Company operates its integrated manufacturing facility in the city of Tirupati, Andhra Pradesh.