Mayuresh Joshi, Angel Broking Stock Recommendations to buy

Here we discuss about stocks and we should buy them or not.
Post Reply
User avatar
Ravi
Posts: 71
Joined: Tue Dec 27, 2016 3:49 pm
Location: Mumbai

Mayuresh Joshi, Angel Broking Stock Recommendations to buy

Post by Ravi »

Amara Raja is the best mid-cap stock to buy now.

In the auto ancillary space and the battery makers, Amara Raja Batteries has languished in terms of price performance over the last few quarters. Exide has done well on the back of good set of numbers coming through. Going forward with the kind of strong volume activity that you are seeing in the auto universe Amara Raja being the second largest battery maker should benefit significantly.

Over the last four to five years, it has actually outpaced Exide in terms of an earnings growth of around 21% compared to Exide’s 6% though in the last two-three quarters, Exide has done exceptionally well both in terms of the top line as well as the margin performance.

Secondly if you look at the kind of multivendor relationship that OEM now mandate, again that is going to be a key beneficiary factor going forward with a lot of launches expected to come through on lot of platforms including Maruti, including Tata Motors and a whole host of other players.

Third, the replacement market is surely and steadily picking up and the margins there are much better than we probably witnessed on the OEM side.

My own take is that the stock has largely underperformed but again over the next four to six quarters and specifically looking at the volume of activity picking up in the OEM market and the pickup happening on the replacement market in terms of realisations and 18% top line growth not ruled out, 20% earnings growth not ruled out even from the current levels and at the current juncture it is attractively priced at around 22 times FY18 earnings.

So Amara Raja among the auto ancillary space, considering the Exide movement and its underperformance, The decline becomes a good buying opportunity for long-term potential investors.
Never give up your dreams
Post Reply