Amber Enterprises Q2 Results Review - Strong Growth Momentum To Sustain In H2 And Beyond: Systematix

Systematix Research Report

Amber Enterprises India Pvt Ltd.’s stellar 2Q (revenue/Ebitda surged 82%/91% YoY) was led by strong revenue in Consumer Durables (up 97% YoY) and Electronics (up 98% YoY) division. Room AC revenue surged 104% YoY aided by favorable weather and channel filling of RAC; non-RAC revenue grew 68% YoY.

It onboarded one new customer for the tower AC and converted a customer from gas charging to ODM solutions. RAC demand in H2 is also expected to be strong driven by channel restocking. In Electronics EMS, Amber Enterprises aims 45%+ growth and 8% Ebitda margin in FY25.

Acquisition of Ascent Circuits and joint venture with Korea Circuits have helped Amber to diversify into new business applications of PCBA and bare PCB manufacturing which have huge potential of localisation in India.

Ascent’s new plant at Hosur will add annual capacity of up to 8,40,000 square metre in two phases (two times of current capacity). Railway Subsystems continued to face slow lifting of materials by Indian Railways and Metro; Amber Enterprises maintains to double revenue in three years on strong order book (Rs 20 billion+) and new product additions.

After a strong Q2 and robust management guidance, we increase revenue/PAT estimates by ~10%/12%. We now expect 28%/33%/58% CAGR in revenue/ Ebitda/PAT over FY24-27E (FY19-24: 20%/18% /7%) with ~19% return on capital employed and ~21% return on invested capital in FY27E.

At 40 times FY27E P/E on current market price after ~30% rally in scrip in last one month, we maintain Hold rating with a revised target price of Rs 6,248 (40 times FY27E P/E).

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