Amber Enterprises India Ltd. share price target

While we remain enthused by market share gains by Amber even in FY23, we note the company has reported (1) negative FCF in FY23, sixth straight year of negative FCF and (2) FY23 RoCE is below cost of capital.

Q4 a beat as all segments posted strong growth, led by electronics (+69% YoY) and RAC & components (+55%)

We expect Revenue/PAT CAGR of 27%/31% over FY22-FY25E and gradual EBITDA margin improvement over this period. We roll forward our estimates to FY25E and value Amber at 34x FY25E EPS of Rs 75.8 and arrive at the TP of Rs 2,580/share (vs. 3,000/share earlier) and maintain our BUY rating on the stock.

While Amber continues to report strong growth (38.4% revenue growth YoY in Q3FY23), we note the margins and RoCE continue to be weaker i.e. less than cost of capital. With aggressive capex at Sri city as well as Chennai, we model the FCF to remain negative in FY23 too.

Q3 topline grew 38% YoY but EBITDA margin disappoints at 5.8% (6.2% est.), dragging PAT well below expectations

Major miss on all the fronts in a seasonally lean quarter

Amber guiding for EBITDA CAGR of 25-30% in medium term is the highlight of the Q2FY23 result.