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Growth guidance increased; upgrade to ADD

Result Synopsis

AMBER delivered significant beat to ours and consensus estimates, with revenue and EBITDA surpassing estimates by 26% and 46% respectively. Consumer durables and Electronics division has registered growth of 67% and 95% respectively on yoy basis, with margin improvement of 250bps and 290bps respectively on yoy basis. Strong revenue growth in consumer durables was on back of channel filling, addition of new customer from gas charging to ODM. On the electronics side consolidation of Ascent circuit has aided in strong growth. Management expects RAC industry to grow at 25-30% in FY25, while Amber growth has been far superior as company has been able to add new customers and increased wallet share from its existing customers. On the electronics side, considering strong performance in 9M and with orders in hand management has raised its FY25 revenue guidance to 55% vs 45% earlier. Management is confident of strong revenue growth in medium term on huge import substitution opportunities and expectation of the new incentive scheme from the government. The company has inked JV with Korea circuits which will further enhance its capabilities and enable company to make inroads into mobile, IT module and semiconductor industry. On the railways and mobility management expects current downtrend to be transient and is maintaining its guidance of doubling its revenue in next 3 years. We remain positive on the EMS space as we believe EMS space will provide huge growth opportunity in medium term given the import substitution. Considering Amber operating in the attractive space and prospects of strong performance we upgrade the stock to ADD with PT of Rs7800 valuing it at 45x FY27 EPS.

We believe AMBER’s focus on enhancing its capabilities on the components side, its JV with Korea circuits will bode well for the company. Further, Asccent circuit will result in increased PCBA manufacturing for the electronics universe. We now estimate Amber’s Revenue/EBITDA/PAT to grow at 26%/31%/61% CAGR over FY24-27E.

Result Highlights

* Quarter summary – Amber delivered better than expected performance with Revenue/EBITDA beating estimates by 24% and 46% respectively. Revenue growth stood at 65% aided by channel filling and customer additions.

* Margins – Gross margins saw a contraction of 140 bps to 18.7%, while EBITDA stood at Rs 1587mn, margin of 7.4% expanding by 138bps.

* Guidance –Management has revised the guidance in the electronics division upwards. Management now believes electronics division to grow more than 55% in FY25 vs earlier guidance of 45% growth. Strong order-book and 9M performance has resulted in increased guidance.

* Sidwal- Railway and Mobility business has been impacted by deferral in offtake of products. However management remains optimistic over medium term backed by strong order book and product expansion

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