Added Amara Raja Batterie
s, even after this 25% run the stock looks
attractive for long term entry.
Quick take >> battery market is mostly a duopoly (Exide-Amara
Raja), strong growth numbers, robust balance sheet, no debt, high
return ratios, consistent dividend payments. 26% held by Jhonson
Controls - largest battery maker in the world. Huge first mover
advantage in new technologies.
Growth ahead >> Strong growth in Telecom and OEM markets; New OEM
contracts with Hero and Bajaj starting Q3FY13; strong replacement
demand from 4W and 2W market segments (also a margin booster as
retail commands better margins); new opportunities in UPS and
Additional market opportunity from greenfield setup for Reliance
4G; Indus Towers switching from diesel genset to battery power;
launch of battery powered cars in future.
The strong replacement market will only grow bigger with growth in
Indian auto sector. Seems like the best play in auto ancillary and
can be held for really long term without any immediate threat of
As Lynch mentions the 2nd player cannot always trade at a huge
discount to the leader. Already the valuation gap is reduced
significantly with Exide and will reduce further going further.
Added **Whirlpool of India. **
Quick take >> From -6 Cr in FY07 to 166 Cr PAT in FY11, the
turnaround has been quite robust. From D/E of 1.07 in 2008 to
becoming completely debt free in FY12.
The Company had issued 15.23 Cr 10% Redeemable Non-Convertible
Cumulative Preference Shares of Rs.10 each to Whirlpool Canada
Holding Company in the year 2005 redeemable at the end of twenty
years with call and put options.
In FY11 the company redeemed 9.84 Cr shares using the put option
and further the balance 5.48 Cr shares were fully redeemed with
dividend paid in FY12. With this the board served dual purpose
a) Reduce holding to 75% as per SEBI norms. The parent Whirlpool of
US holds 75% through Whirlpool Mauritius
b) Clears overhand of preferential dividend and paves the way for
payment of regular dividends for shareholders in future ( no
interest payment, no pref. dividend)
Result >> In Q1FY13, while the topline grew by 10% Net Profit grew by 26% due to EBITDA margin expansion, higher other income and
lower finance costs.
Recently the company launched 160 models across various product categories, plans to spend Rs. 100Cr each in capex and marketing and aims for leadership in its major product categories over next 18 months.
Although the stock looks expensive on trailing P/E because of poorer FY12 numbers, given the growth ahead and management pedigree looks like another turnaround candidate in the making.
Look forward to comments/suggestions from the active members as well any and all negative views and risk concerns regarding all portfolio stocks and capital allocations if can be bettered/ optimized in any possible manner.