HBL Power Systems vs Amara Raja Energy

HBL Power Systems vs Amara Raja Energy: In an ever-evolving world of technology, electricity plays a critical role in running many industries and everyday life. There is a huge demand for power storage, which will play a pivotal role in shaping the EV industry. Global transition from fossil fuels to renewable energy.

These changes can help create a more sustainable, carbon-neutral future. In this article, we will compare HBL Power Systems and Amara Raja, which operates in the Battery industry.

HBL Power Systems vs Amara Raja Energy

HBL power system – Company Overview

Founded by Jagadish Prasad Aluru HBL power system The company specializes in engineered products and services with a focus on aircraft batteries. Building on its expertise in batteries, the company has expanded into new battery-based businesses and markets, including industrial electronics, defense electronics, and railway electronic signals.

This diversification, leveraging the company’s engineering strengths, has led to new businesses in precision manufacturing, rotationally reinforced concrete, and green technologies.

segment analysis

The company generates revenue from two main segments: batteries and electronics. In fiscal year 23, batteries accounted for the largest share of sales at 86.43%, and electronic products accounted for 10.73%. The remaining 2.84% was not allocated.

In terms of sales, most of the sales, 84.84%, come from domestic demand and the remaining 15.15% come from exports. Both the battery and electronic sectors showed growth of 8.20% and 33.04%, respectively, compared to the same period last year. The company operates six manufacturing facilities across the states of Andhra Pradesh and Telangana.

Industries such as industrial batteries account for 69% of revenue contribution, defense and aviation 17%, electronics 11%, and other sectors account for the remaining 3%.

Amara Raza Energy – Company Overview

Amara Raza Energy, also known as Amara Raja Batteries, is a battery manufacturer based in India. The company operates through two main divisions: The first division focuses on producing automotive batteries, which it sells under the brand names Amaron and Powerzone.

These batteries are sold to both replacement market customers and original equipment manufacturers. The second division, known as the Industrial Battery Division, provides batteries to a wide range of industries such as telecommunications, infrastructure, power, railways, etc.

These batteries are sold under flagship brands such as Amaron, PowerStack, Quanta, and QRS series. The majority of the company’s sales are generated from the domestic Indian market. They have a market share of around 30% in the Indian industry.

segment analysis

The Company recognized revenue from the manufacturing and marketing of lead-acid and other storage batteries. Amara Raja earned most of its revenue in FY23 from India, which accounted for 88.12%, while the remaining 11.87% came from outside India.

Across the industry, the segments include Industrials (30%), Automotive (68%) and the rest (including new energy businesses) account for 2% of FY23 revenue.

HBL Power Systems and Amara Raja Energy – Industry Analysis

As technology advances, batteries are also evolving. Lithium-ion batteries currently dominate the battery market, but energy storage capabilities are being improved through the use of salt.

The Indian lead acid battery market is expected to continue to grow. Compound Annual Growth Rate (CAGR) will be more than 9% from 2023 to 2028. During this forecast period, we expect business volume to increase due to increasing demand from telecommunication and data center industries and increasing applications from industries such as railway and defense.

The replacement battery segment currently holds a market share of over 70%. With increasing technological advancements and strengthening of the telecom sector, the lead acid battery industry in India is experiencing growth.

HBL Power Systems vs Amara Raja Energy – Finance

Sales and Net Profit

HBL Systems recorded revenue of Rs. 1,368.68 crore from operations in FY23 compared to Rs. 1,236.21 crore in FY22. On the other hand, Amara Raja’s operating revenue during the financial year was Rs. 10,388.20 crore, an increase from Rs. 8,775.13 crore compared to the previous year.

HBL’s profits have remained steady and have shown improvement recently. In contrast, Amara Raja’s revenue has been trending upward over the years.

HBL Power Systems’ FY23 net profit was Rs. 98.65 crore compared to Rs. In fiscal year 22, it was $9.39 billion. Amara Raja’s profit increased from Rs. 512.57 crore ~ ​​​​Rs. 694.53 million dollars a year ago. HBL Power Systems’ profitability increased from FY22. Amara Raja’s FY23 revenue was similar to its FY20 revenue. As revenue grew, so did profitability.

profit

HBL Systems OPM was 12.30% in FY23, down from 13.12% in FY22. Amara Raja’s ratio increased from 12.54% to 13.34% in FY23. HBL’s OPMs were low in FY23 but improved exponentially over the next five years as manufacturing costs as a percentage of sales decreased, leading to improved margins. Amara Raja’s margin improvement was due to lower material costs as a percentage of sales compared to the previous year.

HBL NPM in FY23 was 7.10% compared to 7.49% in FY22. Amara Raja’s rose to 6.63% from 5.83% in FY 22. HBL’s NPM was impacted by extraordinary items in FY22 totaling Rs. $10.73 billion is tied to gains from asset sales. Amara Raja’s NPM improved as OPM increased.

rate of return

HBL RoE in FY23 was 10.84% ​​compared to 11.37% in FY22. Amara rajas increased from 11.67% in FY222 to 14.10% in FY23. Although HBL’s RoE has improved over the years, its return on additional capital is lower than FY22 and this has implications for FY23. Amara Raja has improved with increasing ratios due to higher returns on new capital i.e. excess return on reserves over RoE.

RoCE was 13.84% in FY22, down from 14.56% at HBL. Amara Raja’s FY23 revenue increased to 18.56% from 15.15% in FY22. HBL’s ratios improved sharply in FY22, declining slightly due to a slight increase in leverage in its capital structure. Amara Raja’s ratios have improved due to increased profits. Amara Raja has better ratios than HBL.

debt analysis

HBL’s debt-to-equity ratio was 0.08 in FY22 and FY23. Amara Raja, on the other hand, has remained constant at 0.02 for five years. Both companies have low debt-to-equity ratios, which has benefited the companies by avoiding expanding their debt bases. As growth continues, we will be able to take on additional debt as needed.

HBL’s interest coverage ratio increased from 17.36 times to 20.82 times in 2022. Amara raja was 43.92 times in FY23, down from 46.68 times in FY22. The HBL ratio has improved every year as interest expenses have decreased and profits have increased. Amara Raja’s profit growth did not help the improvement due to higher interest expenses.

But both companies are at a comfortable level. Typically, companies with three or more times their earnings relative to their interest expenses are better, depending on the industry cycle.

HBL Power Systems and Amara Raja Energy – Key Indicators

Let’s take a look at the key metrics of HBL Power and Amara Raja.

HBL Power Systems vs Amara Raja Energy – Future Plans

HBL power system

• The company has more industry experience that can help it grow its earnings, and the government is investing in rail capital spending. kabach, collision avoidance The popularity of features installed on trains to prevent accidents is also increasing.
• HBL Power expects revenue of ₹1,750 crore in FY24, ₹2,300 crore in FY25 and ₹2,900 crore in FY26. Sales growth is expected in various sectors, including industrial electronics, defense and aviation batteries, and industrial batteries.
• The company plans to invest 50 billion won. Excluding the investment in Tonbo Imaging Ltd worth Rs, capital expenditure for FY24 is $9 billion. 15 billion.

Amara Raza Energy

• The company is venturing into new energy businesses through its 100% subsidiary Amara Raja Advanced Cell Technologies with a planned capital expenditure of Rs. 9,500 crore to set up Giga Corridor in Telangana.
• It is expected to build 16 GWh of lithium-ion cell manufacturing capacity in stages over the next 10 years, with commercialization in the first phase in 2026.
• Establishment of “E Positive Energy Labs”, an R&D facility in Hyderabad with a focus on new energy solutions such as lithium-ion.
• Expands EV charging solutions by acquiring wholly owned subsidiary Amara Raja Power Systems.
• The investment amount is Rs. 950 billion dollars for new energy projects with 262 acres of land allocated.
• Strategic shift from battery manufacturer to energy and mobility solutions provider

conclusion

Towards the end of the article, we’ll take a brief look at both companies. Both companies operate in the battery sector. But because the customers are different, the business models are also slightly different. Both companies have maintained strong financial health, with sales and net profits growing rapidly in recent years.

The low debt ratio is also good for companies to invest in facilities. The government’s push for electrification can also help the industry. What do you think about these companies? Let us know your thoughts in the comments section below.

Written by Santosh

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