Amber Enterprises soars 10%, hits new high of Rs 3,000 on growth prospects

Shares of Amber Enterprises India hit a new high of Rs 3,000 after it rallied 10 per cent on the BSE in Tuesday's intra-day on the expectation of a strong bounce-back in room air conditioner (RAC) volumes during the current quarter (Q4FY21). The stock of the consumer durable company surpassed its previous high of Rs 2,793 touched on February 3, 2021.

In the October-December quarter (Q3FY21), Amber Enterprises had achieved pre-Covid sales level on the back of renewed consumer sentiments which led to demand acceleration. The management believes there is a structural shift in consumer ecosystem as consumers have identified the need to make their living spaces a better one in order to multi-task and make their lives easier.

The company added six new customers for RAC gas filling amid the import ban by the government. The ban on imports with refrigerant filled ACs has opened up new opportunities for the domestic manufacturers and for Amber. RAC contributed 54 per cent of the total revenue of the company.

The management remains optimistic about export prospects for both fully built-up units and components that can potentially emerge over the next 3-4 years. The greenfield expansion in Pune and South India is on track and will benefit from the production-linked incentive (PLI) scheme.

Analysts at Elara Capital expect a strong recovery in all the subsidiaries and capacity expansion. The brokerage firm expects an earnings CAGR of 16 per cent over FY20-23E, driven by rising demand of the outsourcing model, especially by large MNC firms in the durables industry, emerging export opportunities, upcoming PLI scheme on the air conditioner and operating leverage to help expand margin.

"With RAC channel inventory levels now normalized, we expect a strong bounce-back in RAC volumes in Q4FY21. Management remains optimistic about export prospects for both fully built-up units and components that can potentially emerge over the next 3-4 years," analysts at Emkay Global Financial Services said in result update.

At 01:40 pm, Amber Enterprises was trading 7.5 per cent higher at Rs 2,943 on the BSE as compared to a 0.88 per cent risen in the S&P BSE Sensex. A combined 315,000 equity shares have changed hands on the counter so far on the NSE and BSE.