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Amber Enterprises’ (Amber) 1QFY25 results vs. JMFe estimates saw inline revenue and EBITDA margins. Cons revenue at INR 24bn up 41% YoY and down 14% QoQ. 6 year CAGR of +23% (vs. PGEL 50%). SA rev at INR 17bn up 45% YoY. AC & Comp rev at INR 19.4bn up 46% yoy and OPM at 7.4% down 10 bps yoy. Electronic rev at INR 3.8bn rev up 45% YoY. OPM at 8% up 400bps yoy. Railway & Mobility rev at INR 950mn down 9% yoy, OPM at 21.6% up 190bps yoy. Gross margin at 17.8% vs 17.5% YoY and 16.7% QoQ. EBITDA at INR 1.9bn up 49% YoY and down 11% QoQ. OPM at 8.2% vs 7.8% YoY and 7.9% QoQ (JMFe OPM at 8.2%). 6 year CAGR of +23% (vs. PGEL 60%). Adj. Net profit of INR 724mn up 58% YoY and down 24%. 6 year CAGR of +18% (vs. PGEL 77%) 

*  Consumer durable: Growth was mainly led by (1) unprecedented industry growth (2) increasing wallet share from existing customers (3) addition of new customers and (4) diversification of business. RAC channel inventory is low – Q2 is expected to perform better YoY and major traction to be seen from Q3FY25. No pricing action in AC. JV for washing machine Resojet is on track to deliver the guidance - mass production will commence from Q3FY25. Already on boarded four customers + ongoing talks with eight more customers.

*  Electronics: PCB: Government imposing anti-dumping duty on PCB's, enabled Amber to onboard four new customers. In Q1FY25, Ascent circuits grew c.30%+ YoY to INR 730mn with EBITDA of INR c.150mn. IL Jin saw lower growth c.18/19% YoY due to reducing in ASP (by 40%) of speaker and wearable. For FY25, expect c.35% growth. Guidance: revised revenue guidance of c.45% vs. previous 35% in FY25 – basis entering into new verticals like auto (incl EV) and defence. Long term: can expect EBITDA margins of c.12/13% in next 4/5 years.

*  Railway subsystem: Decreased by 9% YoY to INR 950mn due to (1) Delays in the Mumbai Metro project due to shortage of rolling stock sub-systems (2) Delays in the 200 Vande Bharat Express project due to changes in coach composition (3) Shift in focus of Indian Railways this year towards non-AC coaches. Order book stands at c.INR 20.75bn (INR 7.8bn from new products category + INR 800mn from defence and bal. from HVAC) – executable in 2.5/3 years. Guidance: In FY25, Sidwal to see flat growth vs. guided 15/20% due to long approval formalities. Although, continue to maintain the guidance of doubling the revenue in 3 years. 

Maintain BUY with TP of INR 4,770: We expect rev. / PAT CAGR of 21%/67% over FY24-26E, mainly due to (1) ramp up in the electronics and mobility segments, backed with increasing its offering + New segment (PCB) + Strong order book in Sidwal. We also expect pickup in RAC component segment; however RAC product business to remain under pressure with brands going in-house. We value Amber at 42x (previously 37x) on FY26 EPS which implies 35x (previously 30x – due to strong industry tailwinds) to RAC + Component business (lower multiple due to increasing competition and lower margins) and 50x (previously 44x - due to strong visibility over next two years) to other segment (Mobility + Electronics) on FY26E and maintain BUY with TP of 4,770

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