Sequoia Capital India, the venture and growth capital investor, has acquired 1.4 per cent stake in India's second largest battery maker Amara Raja Batteries for Rs 24 crore. The shares were acquired on Wednesday through open market deals on the Bombay Stock Exchange and the National Stock Exchange.
Sequoia Capital arm picked up the shares in two lots of Rs 200 each, a marginal discount to Amara Raja's closing price of Rs 202 on Wednesday. Amara Raja shares were trading at Rs 206.25 at 10:21 AM on Thursday, up 2.10 per cent in a weak Mumbai market.
Earlier this year, Sequoia had also picked up shares in other listed firms like Pratibha Industries and PI Industries.
Founded by first-generation entrepreneur Ramachandra Naidu Galla, Amara Raja Group offers diverse products and services – right from batteries to electronics to power solutions and even fruit juices. The company also competes with India Exide Industries, the market leader for batteries.
Amara Raja Batteries had formed a joint venture with Johnson Controls in December 1997 to manufacture Amaron automotive batteries in India. Johnson Controls, the multi-industrial Fortune 500 company, had revenues of $41 billion and net income of $1.65 billion in 2011. Both Galla family and Johnson Controls hold 26 per cent in Amara Raja while the rest is held by mutual funds and institutional investors.
Amara Raja reported net sales of Rs 558.6 crore in Q2 FY12, a healthy growth of 43 per cent over the corresponding period last fiscal. For H1FY12, the company posted 29.8 per cent increase in net sales to Rs 1,083 crore, with profit after tax rising 34.9 per cent to Rs 90.8 crore.
The revenue increase was on account of substantial improvement in volumes and revenue in industrial battery business where Amara Raja increased its market share in both telecom and UPS segments.
"The volumes in export market witnessed significant growth during the first six months, aided by a surge in demand in African markets and enabled by our relationship with Bharti Airtel," the company stated on Nov 14.
"Amara Raja has maintained a strong balance sheet, with the return ratios in excess of 24 per cent for the past few years. We expect revenues to grow at a CAGR of 15.5 per cent and net profit to grow at a CAGR of 20.2 per cent for FY11-FY13E period," a Prabhudas Lilladher report said about the company.
