Amara Raja Batteries (AMARAJ) - ICICI Direct

The auto industry has exhibited robust growth acrosssegments over the last five years even when sales werehit by a global slowdown in 2008-09. This phenomenalgrowth is expected to translate into strong replacementdemandExhibit 12: Automobile production CAGR for last five years2 Wheeler12.0Tractor10.8M&HCV9.4LCV18.93 Wheeler13.0Utility Vehicle15.2Cars18.60 2 4 6 8 (%) 10 12 14 16 18 20Source: Company, ICICIdirect.com ResearchStronger economic activity, higher disposable incomesand easy financing have led to a strong increase in theregistered vehicle base, which augurs well forreplacement marketExhibit 13: Increasing base of registered vehicles fuelling strong replacement battery demand17.514.314.013.011.910.910.010.59.08.06.77.37.0(crore vehicles)3.50.0FY03FY04FY05FY06FY07FY08EFY09EFY10EFY11ESource: All India Federation of Motor Vehicles Department,, ICICIdirect.com Research, Company Annual reportExhibit 14: Automobile domestic sales trend (in million units)The overall sales volumes remained flattish during theglobal slowdown in FY09. However, sales volumes havegot ramped up in the last two years across segments.The PV segment grew at an exceptional 27.5% CAGRover FY09-11 while two wheeler sales grew at 25. 9%CAGR over FY09-11FY11FY10FY09FY08FY0725.219.515.515.513.84.7 4.9 3.84.0 3.6 3.55.34.4 6.85.374.472.578.793.7117.9FY0611.43.53.670.50.0 20.0 40.0 60.0 80.0 100.0 120.0 140.0 160.0Passenger Vehicles Commercial Vehicles Three Wheelers Two WheelersSource: Company, ICICIdirect.com ResearchICICI Securities Ltd | Retail Equity Research Page 7