Buy Amber Enterprises India Ltd for Target Rs. 9,156 by Geojit Investments Ltd
Diversification Story & Summer Season Demand to Aid Growth
Amber Enterprises India Ltd. is a leading manufacturer of room air conditioners and components for OEM/ODM brands. It produces RACs, HVAC value chains with a diversified B2B presence, and non-AC components like refrigerator and microwave sheet metal. It also operates in electronics and railway/defense subsystems.
• The Indian Room Air Conditioner (RAC) market is expected to grow at a strong 19% CAGR over FY26E–28E, driven by rising consumption and low penetration of just 8%, which offers significant headroom compared to global penetration levels of ~40%.
• Amber is India’s largest OEM/ODM RAC manufacturer, commanding about 27% of the RAC manufacturing market and positioning it as the market leader.
• The company has evolved from a pure RAC and components player into a diversified EMS manufacturer, with an expanded portfolio spanning nonRAC components, PCBs, railway equipment, and subsystems.
• We expect Amber’s revenue to register 27% CAGR over FY26E-28E.
• The company is expanding its PCB/PCBA capacity under the government’s PLI scheme, with a total planned investment of Rs.4,200cr, including one facility currently under construction.
Investment Rationale
* Amber Enterprises India Ltd derives 73% of its FY25 revenue from its consumer durable business (RAC and components). We expect this segment to remain the key revenue driver and project a healthy 22% CAGR over FY26E–28E.
* The company is aggressively scaling up its PCB/PCBA capacity to diversify its revenue mix and cater to the rising demand in the Indian electronics market.
* We expect the electronics segment to deliver a strong 30% CAGR over FY26E– FY28E, with growth likely to accelerate further as new capacities come on stream.
* The company, through its subsidiary ILJIN Electronics, has acquired a majority stake in Unitronics and Shogini, expanding its portfolio to include PLCs, motion control solutions, and related industrial automation products.
Outlook & Valuations
We expect the company to continue gaining market share in the RAC segment, while expansion in the high-margin PCB business and ongoing backward integration initiatives should enhance earnings visibility and margin profile. The stock is currently trading at a one-year forward P/E of 55x, close to the +1 standard deviation band. We are initiating coverage on Amber with a BUY rating and a target price of Rs.9,156, valuing the stock at 43x FY28E EPS.
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SEBI Registration Number: INH20000034
