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On a consolidated basis, Revenue dropped 3% YoY to INR 7647mnwith RACs contributing 54% of the revenue & Components and Mobility business forming the rest. Gross margins & EBITDAM improved 140bps & 60bps to 18.5% & 8.2% respectively. PBT & PAT rose 63% & 12% to INR 399mn & 279mn respectively. Revenue from subsidiaries dropped 15% YoY to INR 1883mn. On a standalone basis, Revenue remained flattish at INR 5764mn. 5.43 lac units of RACs were sold during the quarter compared to 5.72 lac units a year ago. EBITDAM rose 270bps to 7.5% led by Gross Margin improvement to the tune of 240bps to 15.7%. PBT & PAT rose 337% & 58% to INR 271mn & 183mn respectively. CAPEX is guided to be of maintenance nature & greenfield capex is targeted to the tune of INR 3000mn spread over FY21 & FY22 towards setting up manufacturing facility in South India & Pune, Maharashtra. Sidwal's order book stood at INR 4000mn to be executed over 18 to 24 months. Import ban on Refrigerant filled Air Conditioners have created opportunities for domestic manufacturers and Amber is in discussions with large size MNCs and new domestic customers to provide integrated solutions for their requirements. Additional addressable opportunity to the tune of INR 30/40bn has emerged on the back of domestic OEMs turning to local players of the likes of Amber Enterprises (India) Ltd (AEIL).

Consolidated revenues down 3% YoY to INR 7647mn

On a consolidated basis, Revenue dropped 3% YoY to INR 7647mnwith RACs contributing 54% of the revenue & Components and Mobility business forming the rest. On a standalone basis, Revenue remained flattish at INR 5764mn. Revenue from subsidiaries dropped 15% YoY to INR 1883mn. Cumulative revenue of 4 subsidiaries (PICL, ILGIN, EVER & SIDWAL) stood at INR 1883mn.

Consolidated Gross & EBITDA margins improved 140bps & 60bps to 18.5% & 8.2% respectively

Gross margins & EBITDAM improved 140bps & 60bps to 18.5% & 8.2% respectively. Cumulative EBITDA of 4 subsidiaries (PICL, ILGIN, EVER & SIDWAL) stood at INR 199mn. On a standalone basis, EBITDAM rose 270bps to 7.5% led by Gross Margin improvement to the tune of 240bps to 15.7%.

Outlook & Valuation

FY21 revenue are estimated to be impacted adversely with significant loss in Q1 that is peak season for RAC business. 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 importsconstitute 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 AEIL. Management has been guiding for targeted ROCE level of 23-24% over foreseeable future. We fine tune earnings estimates in the light of recent developments & introduce FY23 financials. We estimate revenue & PAT CAGR of 15% &27% respectively during FY20-23 & downgrade the stock from BUY to HOLD with a revised price target of INR 2950 (35x average of FY22E & 23E EPS) on the back of steep run up in the price.

Key Risk

Steep increase in input costs.

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