Amber Enterprises surges 13%; records sharpest intra-day rally in 2 months

The stock of this household appliance company recorded its sharpest intra-day gain since October 23, when it had zoomed 20 per cent

Amid heavy volumes, shares of Amber Enterprises India ended 13 per cent higher at Rs 6,907.80 on the National Stock Exchange (NSE) on Monday, marking its sharpest rally in two months — since October 21, when it surged 17 per cent. In intraday trade, the stock rose 15 per cent, its biggest gain since October 23, when it had rallied 20 per cent. The stock had hit a record high of Rs 7,159 on October 24.

 

Monday’s gains were driven by a block deal in Amber stock on Friday, in which 1 per cent of its equity, worth Rs 210 crore, changed hands. A total of 345,000 shares of the company changed hands at an average price of Rs 6,075, according to the NSE bulk deal data. While Ascent Investment Holdings sold the stake, buyers included Axis Mutual Fund (MF), Tata AIA Life Insurance Company, Mahindra Manulife MF, ICICI Prudential Life Insurance Company, Citigroup Global Markets Mauritius, and Goldman Sachs Investments Mauritius.

 

So far in 2024, Amber’s market price has surged by 117 per cent, compared to the Nifty 50’s 9.3 per cent rise during the same period. The Sensex closed with a 0.64 per cent gain on Monday. The average trading volume nearly doubled, with over 3.33 million equity shares changing hands on the NSE and BSE combined.

 

Amber group, a diversified manufacturing major, operates across three business verticals: consumer durables, electronics manufacturing services (EMS), and railway subsystems and mobility. The consumer durables vertical includes room air conditioner (AC) finished goods, room AC components (including motors), and non-room AC components.

 

The EMS business (comprising Iljin Electronics, Ever Electronics, and Ascent Circuits) provides solutions in telecommunications, automotive, smart energy meters, consumer electronics, appliances, hearables, wearables, and bare-board printed circuit boards (PCBs).

 

Amber also offers integrated solutions to rolling stock customers for HVAC (heating, ventilation, and air conditioning), doors, gangways, and pantry systems, serving the mobility sector, including Indian Railways, Metro, Regional Rapid Transit System, and buses.

 

For the 2024-25 July-September quarter (Q2), Amber’s consolidated revenues surged by 82 per cent year-on-year (Y-o-Y) to Rs 1,685 crore, while operating earnings before interest, tax, depreciation, and amortisation (Ebitda) grew 85 per cent Y-o-Y to Rs 120 crore.

 

The rail segment saw a dip in Q2 due to delays in the Mumbai Metro and Vande Bharat projects, as well as Indian Railways’ shift in focus to non-AC coaches this year. However, Amber remains optimistic about this segment, saying that no orders from Indian Railways have been cancelled. The company has maintained its guidance to double the revenue of its subsidiary Sidwal within three years.

 

Amber has also signed a joint venture agreement with Korea Circuit to enter the advanced manufacturing of high-density interconnect, flex, and semiconductor substrate PCBs. A strong order book and new product additions in railway subsystems and defence are providing long-term growth visibility.

 

The management said that the bare-board PCB market is expected to grow to nearly Rs 80,000 crore by 2029-30, up from the current Rs 32,000 crore, with a compound annual growth rate (CAGR) of 11-12 per cent. Eighty-five per cent of the market is currently supplied by imports, presenting sizeable growth potential for this division. These initiatives unlock the opportunity to capture the domestic market and boost localisation, the management emphasised in its Q2 earnings conference call in October.

 

Analysts at Nuvama Wealth Management expect the revenues of the consumer durables division (including refrigeration and air conditioning, or RAC and components) to grow at a CAGR of 22 per cent over 2023-24 (FY24) through 2026-27 estimates (FY27E), with Ebitda margins rising to 7.7 per cent by FY27E, from 7 per cent in FY24.

 

In the brokerage’s view, the strategic shift towards component supply, combined with the diversification into manufacturing fully automatic top-load and front-load washing machines and their components, should lift the margins of this division.

 

Amber is rapidly transitioning from a RAC-focused player to a diversified EMS player. Already, nearly 35 per cent of Ebitda comes from non-RAC businesses. The brokerage firm anticipates that, given the higher growth in this segment, it will eventually command higher valuations as execution improves and the business achieves scale.