Atlas Battery Limited is a leading battery manufacturer in Pakistan. It manufactures a wide range of products under the popular brand name - AGS. The company is part of the Atlas Group, created in 1962 by Yusuf H. Shirazi. The conglomerate has a number of renowned companies under its belt, dealing in Engineering, Power and Financial domains. Atlas Honda and Atlas Battery were the first two ventures for the group. Its portfolio also includes Atlas Insurance (incorporated in 1980) and Honda Atlas Cars (incorporated in 1992). The most recent venture for the group is Atlas Metals, which commenced operations in 2012.
Atlas Battery Limited (symbol:ATBA) is one of earliest members of the group, starting operations in 1966.The company's premier AGS brand was created in 1969 following a technical collaboration with Japan Storage Battery Co Ltd (also known as GS Yuasa Corporation). The "A" in the AGS brand name stands for Atlas, while the "GS" represents the initials of the Japanese company's founder, Genzo Shmadzu.
AGS has over 30 items in its product portfolio, categorised as light, medium and heavy. The company also manufactures motorcycle batteries and battery tonic. Atlas Battery has been on an impressive run in the past five years, registering solid double-digit growth rates on back of high demand. Persisting electricity shortage and soaring vehicle sales in the country has boosted the need for batteries and has led Atlas Battery Limited to triple its top line in five years from PKR 4 billion in FY10 to slightly above PKR 12 billion in FY14.
Car financing and leasing schemes and the recent low oil prices have pushed up the demand for vehicle usage. This does not, however, necessarily translate into a better performing auto sector in Pakistan. In fact, locally manufactured vehicles came to halt (year-on-year) in 2014. Import of cars is on the up though and expected to soar in the near future.
That being said, the battery industry has evolved over the decades, and does not solely rely on the auto sector like it did before. The acute power crisis in the recent years has created demand for medium and heavy sized batteries for electricity back up. Vehicles, in comparison, require small to medium sized units. Bulk of the battery industry in Pakistan comprises of the organised sector - 90% according to Atlas Battery itself, with the company controlling a major market share in the organised sector.
Fiscal Year 2015 In the twelve months ended June 2015, Atlas Battery exhibited a solid 30% jump in annual sales from the previous period. The company maintained its steep top line expansion trend and reported nearly PKR 16 billion in revenues in FY15, compared to PKR 12.2 billion in FY14. Comparing growth rates however, Atlas Battery Limited did experience a dip in growth rate (from 38% in FY14 to 30%). That said the company stuck to its historical (5-year) average in terms of revenue expansion.
In the recently announced results for the 2015 fiscal year, the battery maker reported significant improvements in profitability. Making a gross profit of PKR 2,4 billion, and an after tax profit of PKR 1 billion, Atlas Battery Limited's gross and net margins for the period were 14.9% and 6.4% respectively, compared to 13.2% and 6.1% in FY14. Per-share earnings also took a jump, from PKR 42.6 in FY14 to PKR 58.3 in FY15.
Outlook It is no doubt that AGS has grown into one of the leading brand names, both in terms of quality and volume in Pakistan's battery market. Backed by Atlas Group, which also owns Atlas Honda and Honda Atlas Cars Limited, the battery maker has an added advantage over competition. Also, most of the macroeconomic variables point out towards an improvement, meaning that Atlas Battery Limited should be able to continue on its high, double-digit (sales) growth trajectory.
In light of the company's upbeat performance in the recent years, stock price has climbed steeply. The share, which exchanged hands at around PKR 165 in the beginning of 2012, is now worth around PKR 727. That being said, 2015 has not been a year to remember for Atlas Battery Limited shareholders, with the stock plunging from around PKR 875 at the beginning of the year. After the ongoing correction in the broader market ends, Atlas Battery Limited is a stock investors will be keeping an eye on. The company has produced solid results lately and with fundamentals backed to stay strong in the near term, Atlas Battery Limited is believed to make investors richer.
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2010 2011 2012 2013 2014 2015
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Sales - YoY 27% 46% 23% 23% 38% 30%
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Average growth 31%
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Gross Margin 14.7% 14.7% 16.2% 14.8% 13.2% 14.9%
Net Margin 5.5% 6.0% 6.7% 6.6% 6.1% 6.4%
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