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Nirmal Bang Report
We met the management of Amber Enterprises India Pvt. Ltd. They were quite bullish on the room AC space, and expected the RAC industry to double in size in the next three to four years
In FY25, the management expects the RAC industry to grow by ~40%. Within consumer durables, RAC and RAC Components contribute ~70% to the topline. Currently, the split of RAC: RAC Components is at ~50:50. Amber is currently capable of catering to ~70% of the BOM cost in RAC. It expects to maintain market share of ~25% in the RAC manufacturing footprint.
Electronics is expected to grow by ~50% in FY25, with an Ebitda margin of ~8%. The management expects to clock double digit margin in the next three years.
The order book for SIDWAL stands at ~Rs 21 billion, with order execution expected over the next three years. The management expects revenue to double in this period.
We maintain Hold with a revised target price of Rs 4,950. This implies a PE of 42 times on Sept’26E EPS - ~30% discount to the five-year historical average PE on one-yr forward basis.
While the contribution from high-margin businesses (RAC and Non-RAC components), expansion of product portfolio under PCBA and PCB and diversification into various electronic applications under Mobility are all positives, scaling up of revenue share and making meaningful contribution to overall margins is still a couple of years away.
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