Amara Raja manufacturing facilities at near 100% capacity utilisation

 

Amara Raja Batteries said that its manufacturing facilities had reached nearly 100 per cent capacity utilisation in order to keep up with the rising demand. The company said the aftermarket was seeing strong pent-up demand and the industrial segment was seeing demand from the telecom and commercial UPS market segments on the back of enhanced priorities for keeping data network uptime at near 100 per cent.

S Vijayanand, CEO, Amara Raja Batteries Limited said, “We have been operating all our manufacturing facilities at near 100% capacity utilisation to keep pace with the demand ramp up. There have been some delays in the capacity expansion programmes in the last couple of quarters due to Covid restrictions and we are working in a focused manner to complete these projects which should help us debottleneck supply constraints in the coming months. It is very heartening to see all the employees and business partners rise to the occasion to put in their best effort to meet the challenges posed by the pandemic.”

The company registered a 35 per cent year-on-year growth in inverters and 40 per cent growth in 2W batteries, driven by 110 per cent growth in OEMs and 15% in the replacement market. Four wheeler batteries registered 4% growth on 11% growth in the replacement business.

“We believe that the capacity constraints of other companies in the market are benefitting Amara and we expect further market-share gains as punch-grid technology gains acceptance,” said research firm Anand Rathi Communications. They expect both OEM and the replacement business to gain market shares. Also, the company’s entry into tower-monitoring systems (currently addressing 550 towers) augurs well for a new revenue stream for its industrial business.

The company said that in the automotive segment, both the OEM and aftermarket demand saw a sharp raise. Vehicle production saw a month-on-month rebound to refill the dealer inventories and gear up for demand during the upcoming festive season. Personal mobility preferences also saw increased purchase of 2W and entry level passenger vehicles. The aftermarket saw strong pent-up demand sustaining after the lifiting of initial lockdowns and with easing of logistics, channel sales and distribution activities were streamlined to meet the demand.

Industrial business continued to see sustained demand from telecom and commercial UPS market segments on the back of enhanced priorities for keeping the data network uptimes near 100%.

Exports of automotive batteries and industrial batteries also saw an upsurge as markets across the geographies opened up.

An analyst report quoting the management stated the capex was at Rs 450–500 crore for FY21, (earlier guidance of Rs 400 crore) as the company expanded 4W (2m units) and 2W (2–3m units) capacities.

Amara Raja profit before tax up 9% at Rs 217 crore in Dec quarter

Industrial and automotive battery maker Amara Raja Batteries Limited has reported a 9.76 per cent increase in profit before tax (PBT) at Rs 217.11 crore for the quarter ended December, 2019 as compared with Rs 197.80 crore in the corresponding period previous year.

During the quarter under review, the company's revenues grew little over 3 per cent to Rs 1760.28 crore from Rs 1707.16 crore in the year-ago period. Amara Raja management said the replacement demand for its batteries across market segments helped the company achieve a health volume growth despite a slowdown in demand from original equipment manufacturers (OEMs) and telecom sectors.

"The automotive sector is facing challenges of demand uncertainty due to social, regulatory and technological changes. The coming months will provide clarity on the medium and long term growth trajectory of this sector. We are closely tracking the emerging opportunities and will continue to leverage our strengths to tap into these opportunities at the right time," Amara Raja Batteries vice chairman and managing director Jayadev Galla said.

Amara Raja Batteries up 7%; reports highest-ever net profit in Q2

Shares of Amara Raja Batteries surged 7 per cent to Rs 699 on the BSE on Monday, after the company reported 370 bps improvement in EBITDA (earnings before interest, tax, depreciation and amortisation) margin at 17.2 per cent in the September 2019 quarter (Q2FY20) on account of softer commodity prices. In comparison, the S&P BSE Sensex was down 0.16 per cent at 40,260 points at 09:39 am.

The company, a leading industrial and automotive battery major, reported its highest-ever net profit of Rs 219 crore, up 82 per cent on year-on-year (YoY) basis. Profit before tax (PBT) increased 25 per cent (YoY) at Rs 232 crore during the quarter. Operational revenue, however, declined 3 per cent to Rs 1,695 crore on YoY basis.

The both automotive and industry battery businesses have recorded healthy volume growth during the quarter barring automotive OE segment. The management said the demand for AMARON and POWER ZONE brands in registered significant uptick in replacement market in four-wheeler as well as two-wheeler segments. It also believes that continued technology upgradation and widening product portfolio to meet emerging customer needs will help the company navigate through the demand cycles and sustain growth momentum.