Amara Raja Batteries is a mid-cap stock. The company caters to the industrial and automotive batteries segment and is India's second-largest battery manufacturer. It gets around 55 per cent of its revenue from industrial batteries catering to sectors such as telecom, power and railways. These segments played a major role in holding up demand in 2008-2009 when demand from the automobile segment had slowed down. The company has a strong presence in the replacement market as well.
The company's debt-to-equity ratio jumped from 0.20x in March 2006 to 0.95x in March 2008, but has now once again fallen to 0.70x.
The company's five-year compounded annual EPS growth rate is 28 per cent. The price to earnings ratio stands at a modest 8.9x. This is lower than its five-year median PE of 10.96x. The PEG ratio of the stock stands at an attractive 0.32.
In the near term the company may face some problems due to margin pressures in the telecom sector, one of its key clients. If you intend to invest for three-five years, you may accumulate this stock.
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