Moneycontrol Bureau
Shares of Amara Raja Batteries rallied 6 percent intraday on Tuesday after Bank of America Merrill Lynch upgraded the stock to 'buy'. The brokerage has also increased its target price to Rs 940, an upside of 75 percent.
Surprised by its 'superior' profit margin, BoA ML expects Amara Raja to see significant market share gains in both automobile and power back-up batteries by FY17 owing to new capacity additions.
“The firm has successfully leveraged to increase its EBITDA margin to over 17 percent, which is 300 basis points (bps) higher than its key competitor Exide. We now expect EBITDA margin to rise to 18.2 percent by FY18E from 17.2 percent in FY15E and 16.7 percent in FY14,” it said in a note.
According to BoAML, the stock may see further upside from tax incentives on new plants.
At 10:36 hrs, the stock was quoting at Rs 754.70, up Rs 11.45, or 1.54 percent on the BSE.
(Posted by Nasrin Sultana)
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