Target: ₹8,510
CMP: ₹6,665.40
Amber Enterprises posted strong Q3 results, surpassing expectations in both revenue growth and margins. As the summer season approaches, the company anticipates a slowdown in revenue growth, particularly in consumer durables. However, the overall outlook remains positive due to its transition into a fully integrated B2B player, which offers a larger addressable market, improved margins, higher RoEs, and potential for robust earnings growth.
Consumer durables segment continued its growth trajectory, driven by the strong performance of room air-conditioners and the conversion of a major multinational customer to ODM solutions. Additionally, the company secured new orders for commercial air conditioners and expanded its customer base.
Management raised its revenue growth guidance for FY25, citing a healthy order book and new customers in various segments such as renewable energy, commercial vehicles, and defense. Amber is also considering expansion plans for its Korea JV based on the incentives offered under the new components PLI scheme.
The electronics division witnessed growth, supported by the consolidation of Ascent Circuits and a significant increase in the core PCBA business. The expansion project in Hosur for Ascent Circuits is progressing as planned and is expected to be completed by Q4FY26.
Although Sidwal experienced a decline in sales and margins, the company remains optimistic about a rebound in H2FY26 and aims to double its sales in the next three years.
Based on the Q3 performance, we maintain our Outperform rating and revise the target price to ₹8,510 (at 55x March 2027E P/E).
Published on January 28, 2025.
