Amara Raja's Q1FY15 operational performance was above expectation driven by higher-than-expected revenue and margins. Net sales grew 15.1% y-o-y (up 15.9% q-o-q) to Rs 10.3 billion (versus estimates of Rs 9.8 billion). Ebitda margin at 17.1% (estimated 16.6%) improved by 80 bps y-o-y/160 bps q-o-q. Other expenditure declined 130 bps q-o-q (100 bps y-o-y) driven by lower share of home UPS (trading business) and cost reduction measures (particularly for power & fuel). Despite the robust 20.7% y-o-y ebitda growth, PAT growth was restricted to 8.3% to Rs 1.06 billion (estimated Rs 1.03 billion) on higher depreciation charge (as per the provisions of new Companies Act).
Key takeaways from management are: Robust volume growth in industrial (22% y-o-y) and 2Ws (78% y-o-y). 4W volumes grew 2% y-o-y, with OEM growth of 3%. A 15%-growth in 4W replacement demand was offset by a decline in demand in private label manufacturing. Exports grew 20% (~5% of revenue). Demand outlook remains robust across segments.