Amber Enterprises Q2 Results Review - Promising Growth Outlook: Dolat Capital

Dolat Capital Report

Amber Enterprises India Pvt. Ltd.’s room AC and component division grew ~40% YoY in Q2 FY24 as rising temperatures and ongoing festival season helped in liquidation of majority of the inventory.

While mobility saw good 26% growth, muted growth in motors (+4%)/electronics (+3%) division was a negative surprise.

Diversification to non- rrom AC businesses resulted in better product mix and aided Ebitda margin expansion of 150 basis points to 6.4%, cushioning the impact of soft room AC demand in lean season.

In FY24, volume growth in rrom AC industry is expected to be flattish or in single digits. Amber is confident of doubling revenue of electronics and mobility division by FY26 with addition of new customers and new products.

We have cut our FY24/25E by 8.5/5.7% to Rs 61/89 respectively to factor in Q2 performance, and introduced FY26E earnings per share at Rs 116.

We expect revenue/profit after tax compound annual growth rate of 17/35% over FY23-26E.

Maintain 'Accumulate' with a revised target price of Rs 3,223 (28 times FY26E EPS).

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