Amara Raja Q4 net up 12%, hints at sector slowdown in FY12

Amara Raja Batteries’ fourth quarter (January-March) net profit rose 12% year-on-year to Rs 41.1 crore on strong sales.

It, however, hinted at possible slowdown in the sector going ahead due to macro-economic headwinds and pressure on volumes from the telecom and automotive industry.

The company said volumes in the UPS business segment grew "substantially" in 2010-11 (April-March) due to growing demand for batteries, and that segment coupled with emerging applications like renewable energy and focus on exports will be thrust areas in the current fiscal year.

The company’s net sales in the fourth quarter were up 16% from a year ago to Rs 500.9 crore. Volumes at Amara Raja’s industrial battery unit as well as automotive battery unit rose 20% in 2010-11 (April-March).

However, Amara Raja said slowdown in network expansion and sharing of tower infrastructure led to lower market potential in telecom sector, and that has presented "significant challenges" in volume and price realization.

"The hardening interest rates fuelled by inflation along with increasing fuel prices is likely to impact the macro economy.

The company will appropriately respond to the developments in telecom, possible slowdown in the automotive original equipment business and volatile movements in lead in managing the year ahead," said Jayadev Galla, managing director.

Automobile sales surged around 30% last fiscal, which in turn led to strong demand for automotive components including batteries.

However, sales growth this year is expected to slowdown to 12-15% due to last year’s high base coupled with rising interest rates and high fuel prices.

Amara Raja Batteries had doubled its two-wheeler or small battery capacity to 3.60 million units per year in 2010-11, from 1.80 million units earlier.

Amara Raja Batteries shares were trading up 2.2% at Rs 205.80 on NSE in morning trade.

Source: www.moneycontrol.com

Thanks & Regards,
Priyanka Kothari,
Client Service Associate.