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On a consolidated basis, Revenue rose22% YoY to INR 15984mnwith RACs contributing 60% of the revenue & Components and Mobility business forming the rest. Channel inventory during the quarter returned to normalcy. Gross margins dropped 80bps (led by unprecedented increase in input costs) to 15.9% however EBITDAM rose 100bps to 8.8%. Though in % terms, gross margins reflect drop, in terms of per unit of RAC unit sold the company has maintained gross margins by passing on price increase to the tune of 10/12% during the quarter. PBT & PAT rose 66% &22% to INR 1165mn & 765mn respectively. Revenue from subsidiaries rose9% YoY to INR 2921mn.On a standalone basis, Revenue rose 25% YoY to INR 13063mn. 2.1mn units of RACs were sold during FY21 compared to 3mn units a year ago.

EBITDAM rose 120bps to 8.5% despite fall in Gross Margin to the tune of 200bps to 13.7%. PBT & PAT rose 82% &15% to INR 942mn &606mn respectively. CAPEX is guided to be of INR 2.9bn cumulatively for setting up Pune, Maharashtra & South Indian manufacturing facilities. Sidwal's order book stood at INR 3.5bn to be executed over 18 to 24 months. Import ban on Refrigerant filled Air Conditioners have created opportunities for domestic manufacturers and Amber has already added 6 new customers since the announcement of notification.

Consolidated revenues up22% YoY to INR 15984mn

On a consolidated basis, Revenue rose 22% YoY to INR 15984mnwith RACs contributing 60% of the revenue & Components and Mobility business forming the rest. Channel inventory during the quarter returned to normalcy. On a standalone basis, Revenue rose 25% YoY to INR 13063mn.2.1mn units of RACs were sold during FY21 compared to 3mn units a year ago. Revenue from subsidiaries rose9% YoY to INR 2921mn.

Consolidated Gross margins dropped 80bps whereas EBITDA margin rose 100bps

At a consolidated level, Gross margins dropped 80bps (led by unprecedented increase in input costs) to 15.9% however EBITDAM rose 100bps to 8.8%. Though in % terms, gross margins reflect drop, in terms of per unit of RAC unit sold the company has maintained gross margins by passing on price increase to the tune of 10/12% during the quarter. PBT & PAT rose 66% & 22% to INR 1165mn & 765mn respectively. On a standalone basis, EBITDAM rose 120bps to 8.5% despite fall in Gross Margin to the tune of 200bps to 13.7%. PBT & PAT rose 82% & 15% to INR 942mn & 606mn respectively. Cumulative EBITDA margin of subsidiaries rose 80bps to 10.4%.

Outlook & Valuation

FY22 revenue are estimated to be impacted adversely with significant loss in Q1 that is peak season for RAC business on account of ongoing lockdowns due to second wave of COVID-19. Over the long term, however, recent ban on import of RACs as well as GOI's push for Atmanirbhar Bharat should act as a big enabler for RAC industry as electronics imports constitute 3rd largest segment in India. Even recent shift to China+1 strategy taking place from domestic OEMs to reduce lead time to source RACs should be a big boost for players like Amber. We fine tune estimates in the light of the company having lost peak quarter & headwinds in terms of steep increase in input costs on profitability. We estimate revenue & PAT CAGR of 46% & 83% respectively during FY21-23 &maintain HOLD with a revised price target of INR 2890 (35x23E EPS).

Key Risks:

* Continued Steep increase in input costs.

* Lockdown impacted by second wave of COVID-19 getting prolonged.

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