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Monday, December 23, 2024 | 03:15 PM ISTEN Hindi

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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

A Teflon resilience in markets that won’t let declines stick

Deepak Korgaonkar Mumbai

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Shares of Amber Enterprises India (Amber) moved higher by 13 per cent to Rs 6,881.10 on the BSE in Monday’s intra-day trade, its sharpest intra-day rally in two months, amid heavy volumes. The stock of the household appliance company recorded its sharpest intra-day gain since October 23, when it had zoomed 20 per cent. The stock had hit a record high of Rs 7,157.85 on October 24.
 
Thus far in the calendar year 2024, the market price of Amber has zoomed 116 per cent, as compared to the 8.5 per cent rise in the BSE Sensex during the same period. At 2:17 PM, the company's stock was trading 11 per cent higher at Rs 6,813.60, as against a 0.42 per cent gain in the benchmark index. The average trading volumes on the counter nearly doubled, with a combined nearly 2.7 million equity shares, changing hands on the NSE and BSE.
 
 
The Amber Group, a diversified manufacturing major, operates across three business verticals spanning consumer durables, Electronics (EMS) and railway subsystems and mobility. While the consumer durables vertical comprises RAC (room AC) finished goods, room AC components including motors and non-room AC components, the EMS business (ILJIN Electronics, EVER Electronics and Ascent Circuits) delivers solutions in telecom, automotive, smart energy meters, consumer electronics and appliances, hearables and wearables, and bare board printed circuit boards (PCB’s).
 
Amber provides integrated solutions to rolling stock customers for HVAC, Doors, Gangways, and Pantry Systems, catering to the mobility sector, including Indian Railways, metro, RRTS and buses.
 
For the September 2024 quarter (Q2FY25), Amber’s consolidated revenues surged by 82 per cent year-over-year (YoY) to Rs 1,685 crore, while operating earnings before interest, tax, depreciation and amortisation (Ebitda) grew 85 per cent YoY to Rs 120 crore.
 
The railways segment witnessed a dip in Q2 due to a delay in the Mumbai metro and Vande Bharat projects, and the shift in focus by the Indian Railways to non-AC coaches this year. However, Amber remains positive on this segment, and has stated that no orders have been cancelled by the Indian Railways. It maintained its guidance to double its subsidiary Sidwal’s revenue in three years.
 
The company also signed a joint venture agreement with Korea Circuit to foray into the advanced manufacturing of HDI, Flex, and Semiconductor Substrate PCBs. The strong order book and new product additions in Railway subsystems and defense are providing long-term visibility on growth.
 
The management said the bare board PCB market is expected to grow to almost Rs 80,000 crore by FY 2030 from the current level of Rs 32,000 crore, with a compound annual growth rate (CAGR) of almost 11 to 12 per cent. And interestingly, close to 85 per cent of the market today is fed through imports. So, this leaves a big delta of growth for this division. These initiatives unlock the opportunity to capture the domestic market and localisation potential as well, the management said in its Q2 earnings conference call.
 
Overall, analysts at Nuvama Research expect revenues of the consumer durables division (comprising RAC and components) to grow at a compound annual growth rate (CAGR) of 22 per cent over FY24–27E, with Ebitda margin ratcheting up 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 a diversification into manufacturing of fully automatic top-load and front-load washing machines and their components should lift the margins of this division.
 
Notably, the PCB market in India is poised for substantial growth, having reached a value of $5.4 billion in CY23. According to projections by IMARC Group, the market is expected to expand drastically, reaching $21.3 billion by CY32. This works out to a CAGR of 16.4 per cent over 2023–32, implying a myriad of opportunities for Amber to capture the domestic market by substituting imports, according to analysts.

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First Published: Dec 23 2024 | 2:55 PM IST

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