IGI Logo

Strong recovery amid challenging period…

About the stock: Amber is a leading solution provider for air conditioner OEM/ODM industry in India.

* The company has a product portfolio including RACs, RAC components and other non AC components

* Derives ~62% of its revenues from RACs and the rest from components and mobility applications

Q1FY22 Results: Amber reported a strong revival despite supply disruption and lower volume offtake.

* Revenue jumped to ~| 708 crore, up ~173% YoY led by strong growth in both RAC and components & mobility segments

* Gross margins increased 60 bps YoY while the company turned EBITDA positive at ~| 42.2 crore with EBITDA margin of ~6%

* PAT was positive at ~| 11 crore (vs. loss of | 24 crore in Q1FY21).

What should investors do?

Amber’s share price has grown by ~2.5x over the past five years (from ~| 1200 in August 2016 to ~| 2900 levels in August 2021).

* We maintain our BUY rating on the stock

Target Price and Valuation: We value Amber at | 3365 i.e. 33x P/E on FY23E EPS.

Key triggers for future price performance:

* The company is a major beneficiary of the PLI scheme provided by GoI and has two new facilities approved under PLI with the AC component business contributing ~38% to its topline

* Import ban on ACs with refrigerants provides Amber the opportunity to gain market share. The company plans to increase manufacturing capacity by 35% in the next two years to ~6.2 million (mn) units

* New export opportunities in US and Middle East

Alternate Stock Idea: We also like Dixon Technologies in our coverage universe.

* Dixon is India’s leading electronic manufacturing (EMS) provider and is one the main beneficiaries of the PLI scheme introduced by government

* BUY with a target price of | 5050

To Read Complete Report & Disclaimer Click Here

https://secure.icicidirect.com/Content/StaticData/Disclaimer.html

Above views are of the author and not of the website kindly read disclaimer