Review

AMARA RAJA BATTERIES

Ticker : 500008
FV: Rs.1
52-Week H/L: Rs.907.75/670.65

We had recommended Amara Raja Batteries Ltd (ARBL) in volume no. 35, issue no.12 (dated Jan 15, 2019), when the scrip was trading at Rs 757.70. Our recommendation was based on factors like the company’s greenfield capacity expansion. The company had also taken up a pilot project of the lithium-ion battery for e-rickshaws and buses. In Q3FY19, ARBL’s revenue increased by 9.1 per cent YoY to Rs. 1694.66 crore from Rs 1553.46 crore in December 2017. The company’s net profit stood at Rs. 130.89 crore, down 2.65 per cent YoY from Rs. 134.45 crore last year. The company plans to foray into the below 150 AH bat-tery segment for applications in inverters, e-rickshaws and solar power, the production of which will start in Q1FY20. Its capex guidance for FY19E stood at Rs 450 crore. Thus, we recommend to HOLD the stock. 

POWER FINANCE CORPORATION  

Ticker: 532810
FV:Rs.10
52-Week H/L: Rs.122.90/67.60 

We had recommended Power Finance Corporation in volume no. 35, issue no.18 (dated Feb 25, 2019), when the scrip was trading at Rs 110.20. Our recommendation was based on factors like surging power prices at the exchanges due to demand and growth visibility in renewable energy for the company. In Q3FY19, PFC’s revenues stood at Rs 7362.29 crore, as against Rs 6194.77 crore in Q3FY18, registering a growth of 18.84 per cent YoY. The company’s net profit stood at Rs 2075.84 crore in Q3FY19, up 29.38 per cent YoY as against Rs. 1604.43 crore. PFC has exposure to 22 stressed power assets on the private sector, all of which have been recognized as NPAs. The company is expected to take a haircut of 40-50 per cent on the power sector assets. Thus, we recommended to BOOK PROFIT on Mar 19, 2019.