Amber Enterprises India Ltd. share price target

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

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 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.

Unseasonal rains in North India in Apr’23 have impacted the revenue growth rates. However, we note Amber has gained market shares and reported revenue decline of just 6.8% vs industry revenue decline of 20-25% YoY. The strategy to focus on components business is working well.

We maintain our BUY recommendation on the stock.

Q1 revenue weak given the worst of bad seasons, though margins improved on a better product mix