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1. Company Snapshot

1.a. Company Description

Varta AG, through its subsidiaries, researches, develops, produces, and sells microbatteries, household batteries, and energy storage solutions worldwide.It operates in two segments, Lithium-Ion Solutions & Microbatteries and Household Batteries.The Lithium-Ion Solutions & Microbatteries segment offers zinc-air batteries primarily for use in hearing aid devices; lithium-ion battery solutions for wireless headphones; wearables, which include medical devices to measure hypertension, blood sugar, and other bodily functions, as well as the power supply for COVID19 antibody tests; and rechargeable battery solutions for industrial and original equipment manufacturers for use in various applications, such as servers, car keys, alarm systems, or smart meters.


This segment is also involved in the development, system integration, and assembly of lithium-ion battery packs for portable industrial, communication devices, electric power tool, home, garden, and medical applications.The Household Batteries segment offers household batteries, rechargeable batteries, chargers, power banks, lights, and energy storage systems.The company was founded in 1887 and is headquartered in Ellwangen, Germany.


Varta AG is a subsidiary of Montana Tech Components AG.

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1.b. Last Insights on VAR1

Varta AG's -28.0% performance over the past three months can be attributed to concerns over its struggling battery business, particularly in the automotive sector. The company's inability to meet demand and supply chain disruptions have led to decreased sales and profitability. Additionally, the decline in demand for traditional batteries due to the rise of renewable energy sources has further exacerbated the issue.

1.c. Company Highlights

2. Transcript Summary

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3. NewsRoom

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Varta (ETR:VAR1) investors are sitting on a loss of 88% if they invested three years ago

Apr -02

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At €15.34, Is Varta AG (ETR:VAR1) Worth Looking At Closely?

Mar -06

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Varta AG's (ETR:VAR1) Intrinsic Value Is Potentially 85% Above Its Share Price

Feb -08

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Investors in Varta (ETR:VAR1) have unfortunately lost 84% over the last three years

Oct -05

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Is Now The Time To Look At Buying Varta AG (ETR:VAR1)?

Aug -19

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4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (5.62%)

6. Segments

Consumer Batteries

Expected Growth: 5%

Varta AG's consumer batteries segment growth is driven by increasing demand for portable electronics, rising adoption of e-mobility and renewable energy systems, and expanding distribution channels. Additionally, the company's focus on innovation, quality, and sustainability contributes to its market share gain.

Micro Batteries

Expected Growth: 5%

Varta AG's Micro Batteries segment growth is driven by increasing demand for IoT devices, wearables, and hearables, as well as advancements in miniaturization and energy density. Growing adoption in medical devices, smart home systems, and industrial applications also contribute to the segment's growth.

Lithium-ion Coinpower

Expected Growth: 7%

Varta AG's Lithium-ion Coinpower growth is driven by increasing demand for IoT devices, wearables, and hearing aids, which rely on compact, high-energy batteries. Additionally, the trend towards miniaturization and electrification in industries such as automotive and aerospace further fuels growth. Government initiatives and investments in clean energy also contribute to the rising adoption of lithium-ion batteries.

Energy Storage Systems

Expected Growth: 8%

Varta AG's Energy Storage Systems growth is driven by increasing adoption of renewable energy sources, declining battery costs, and rising demand for grid-scale energy storage. Additionally, government incentives and regulations supporting clean energy transition, as well as growing consumer interest in electric vehicles and home energy storage, contribute to the 8% growth rate.

Others

Expected Growth: 4%

Varta AG's growth is driven by increasing demand for electric vehicles, rising adoption of renewable energy sources, and growing need for energy storage solutions. Additionally, the company's focus on innovation, expanding product portfolio, and strategic partnerships contribute to its growth momentum.

7. Detailed Products

Batteries for Passenger Cars

Varta AG offers a wide range of batteries for passenger cars, providing reliable starting power and long lifespan.

Batteries for Commercial Vehicles

Varta AG provides high-performance batteries for commercial vehicles, ensuring reliable operation and minimizing downtime.

Batteries for Motorcycles

Varta AG offers specialized batteries for motorcycles, providing reliable starting power and long lifespan.

Batteries for Leisure and Marine Applications

Varta AG provides batteries for leisure and marine applications, including boats, caravans, and motorhomes.

Energy Storage Systems

Varta AG offers energy storage systems for homes and businesses, providing efficient and reliable energy storage solutions.

Home Energy Storage Systems

Varta AG provides home energy storage systems, enabling homeowners to store excess energy generated by solar panels or wind turbines.

Industrial Batteries

Varta AG offers industrial batteries for a wide range of applications, including backup power systems and material handling.

8. Varta AG's Porter Forces

Forces Ranking

Threat Of Substitutes

Varta AG faces moderate threat from substitutes, as there are alternative energy storage solutions available in the market, such as lithium-ion batteries. However, Varta's focus on innovation and quality helps to mitigate this threat.

Bargaining Power Of Customers

Varta AG's customers have low bargaining power due to the company's strong brand reputation and diversified customer base. This reduces the risk of customers negotiating lower prices or demanding better services.

Bargaining Power Of Suppliers

Varta AG's suppliers have moderate bargaining power due to the company's dependence on a few key suppliers for raw materials. However, Varta's long-term relationships with suppliers help to mitigate this risk.

Threat Of New Entrants

The threat of new entrants is low for Varta AG, as the company has a strong brand reputation and significant barriers to entry, including high capital requirements and regulatory hurdles.

Intensity Of Rivalry

The intensity of rivalry in the battery market is high, with several established players competing for market share. Varta AG must focus on innovation and quality to maintain its competitive edge.

9. SWOT Analysis

Strength

Weaknesses

Opportunities

Threats

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

Value
Debt Weight 26.67%
Debt Cost 11.10%
Equity Weight 73.33%
Equity Cost 11.10%
WACC 11.10%
Leverage 36.37%

11. Quality Control: Varta AG passed 1 out of 9 key points

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

Stock-Card
Ceres Power

A-Score: 4.0/10

Value: 6.4

Growth: 4.0

Quality: 4.2

Yield: 0.0

Momentum: 9.5

Volatility: 0.0

1-Year Total Return ->

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KATEK

A-Score: 3.8/10

Value: 7.4

Growth: 7.2

Quality: 2.3

Yield: 0.0

Momentum: 4.0

Volatility: 1.7

1-Year Total Return ->

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Leclanché

A-Score: 3.6/10

Value: 8.0

Growth: 4.1

Quality: 5.0

Yield: 0.0

Momentum: 4.5

Volatility: 0.0

1-Year Total Return ->

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ADS-TEC Energy

A-Score: 3.2/10

Value: 8.0

Growth: 5.1

Quality: 5.0

Yield: 0.0

Momentum: 0.5

Volatility: 0.7

1-Year Total Return ->

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Stock-Card
Alfen

A-Score: 3.1/10

Value: 7.0

Growth: 5.3

Quality: 2.7

Yield: 0.0

Momentum: 2.5

Volatility: 1.3

1-Year Total Return ->

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Stock-Card
Varta

A-Score: 3.0/10

Value: 10.0

Growth: 0.4

Quality: 6.0

Yield: 1.2

Momentum: 0.5

Volatility: 0.0

1-Year Total Return ->

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Peers Metrics

12.e Scoring Insights

12.f DCF BETA

Parameters

Short Term Growth

Short term Time

Long-Term Growth

WACC

Target Price

1.21$

Current Price

1.21$

Potential

-0.00%

Expected Cash-Flows