Amber Enterprises India Ltd. share price target

Over the past 3-4 years, Amber has diversified business from standalone RAC segment to electronics and railway segments which is now reaping fruits for the company. Each segment will contribute meaningfully to revenues and bottomline in 2-3 years. Q3FY25 revenues rose 65% led by robust growth across segments

Amber Enterprises (Amber) reported better-than-expected revenue and EBITDA in 3QFY25; however, PAT came in line with our estimate due to losses from subsidiaries. Revenue/EBITDA improved 65%/102% YoY, led by the consumer durables and electronics segments, while railways continued to decline.

Q2 achieved 82% YoY topline growth with 30bps EBITDAM expansion, although gains were tempered by the shift in product mix

Amber’s business transformation journey is progressing well. The company is taking rapid strides under its electronics business –we expect it to compound materially over the medium term.

Amber Enterprises (Amber) reported better-than-expected results driven by strong
performance of the consumer durables and electronics segments. The company’s
revenue/EBITDA jumped 82%/91% YoY for 2QFY25.

Q2 numbers were strong with a profit of Rs. 21 crore (versus a loss in the same quarter last year), superseding our estimates of Rs. 9 crore. Revenues rose 82% y-o-y (above our estimates of 37%) led by Consumer Durables (94% growth y-o-y) and Electronics (95% y-o-y) segments.

Healthy growth in its consumer durables and electronics drove Amber’s strong Q2 growth. With its expanded portfolio and client added, it expects to outdo industry growth in RAC.

We recently interacted with Amber Enterprises (AMBER) management to understand the scope of growth in the consumer durables, railways, and electronics segments.

Amber is capitalising on strong growth in the AC industry backed by a strong summer and soaring temperature. AC penetration is expected to improve significantly, and volumes are likely to clock a 30% CAGR going forward.

Q1 numbers were strong with a profit of Rs. 75 crore (up 60% y-o-y) that was in line with our
estimates. Revenues grew by 41% y-o-y (Beats our estimates by 10%) led by RAC segment (+51%)
driven by favourable peak summer demand.

Q1 numbers were strong with a profit of Rs. 75 crore (up 60% y-o-y) that was in line with our
estimates. Revenues grew by 41% y-o-y.

Amber’s revenue/EBITDA/PAT grew 41.1%48.7%/58.6% YoY, respectively. Gross/EBITDA margin expanded 30bps/42bps lower input prices, in our view.

We maintain our HOLD rating on the stock.

Subdued Q4 topline with EBITDA margin expansion of 110bps on better product mix

AMBER: Persistent near-term challenges; cut to SELL. CPI and IIP: Still some pain points on inflation. Credit Composition: Study on personal loans. HMCL: Healthy quarter but positives priced in. TMX: Improving order outlook; maintain HOLD. BANDHAN: Recovery on track. IGL: Legacy UP, new GAs can offset slowdown, reiterate BUY. ZYWL: Seasonally weak quarter

We revise our rating from BUY to HOLD on the stock.

We currently have a BUY rating on the stock with a revised TP at Rs 3,700/share with an upside of 21% from the CMP where we value the stock at 33x on its FY26EPS.

Takeaways from Q2FY24: (1) New businesses of Electronics, Railway sub-systems and Mobility are gaining traction (likely to post revenue growth of 25+% YoY in FY24). The focus on hearables ad wearables and joint venture with Nexxbase augurs well for strong growth in PCBA business. (2) Strategy to focus more on components instead of selling RAC is likely to result in higher growth in FY24-26. (3) EBITDA margin is likely to expand due to lower input prices and operating leverage.