IGI Logo

Consumer Durables segment drags performance

Amber’s Consumer Durables (CD) segment declined 18.4% YoY in Q2FY26; however, the RAC industry witnessed a sharper ~35% decline due to unfavourable weather conditions and purchase deferments ahead of the GST rate reduction implementation. Company expects RAC industry to be flat for FY26; however, CD segment is expected to grow by 13-15% for FY26. Electronics division EBITDA margins contracted by 190bps to 5.8% due to increase in the price of copper clad laminates and gold prices, however company expects margin of 8-9% for FY26. Railway division grew by 6.9% in Q2FY26 and company expects to double the revenue in next two financial years. We cut our earnings estimate by 19.7%/13.4% for FY27/28E and Maintained ‘BUY’ rating and SOTP-based TP of Rs8,901 (Earlier 9,889) valuing its Consumer Durables segment at 26x EV/EBITDA Sep-27E, which implies 24x EV/EBITDA Sep’27E and 51x Sep’27E earnings on consolidated basis. We estimate revenue/EBITDA/PAT CAGR of 20.9%/25.6%/43.8% over FY25-28E with EBITDA margin expanding by ~90bps to reach 8.8% by FY28E.

Q2FY26 financial performance: Sales declined by 2.2% YoY to Rs16.5bn (PLe: Rs16.5bn). Consumer Durables revenue declined by 18.4% YoY to Rs8.9bn, whereas Electronics/Mobility revenue grew by 30.5%/6.9% YoY to Rs6.4bn/Rs1.3bn. Gross margin expanded by ~40bps to 20.5% (PLe: 19.0%). EBITDA declined by 19.7% YoY to Rs913mn (PLe: Rs1.1bn). EBITDA margin contracted by ~120bps to 5.5% (PLe: 6.4%). PBT loss stood at Rs403mn (PLe: Rs314mn). AMBER reported adjusted loss of Rs321mn (PLe: Rs216mn) against profit of Rs210mn in Q2FY25.

H1FY26 financial performance: Sales grew by 24.7% YoY to Rs51.0bn. Consumer Durables/Electronics/Railway grew by 16.1%/60.0%/16.6% YoY to Rs35.2bn/Rs14.1bn/Rs2.5bn. EBITDA grew by 12.3% YoY to Rs3.5bn. EBITDA margin contracted by ~80bps YoY to 6.8%. PBT declined by 11.3% YoY to Rs1.2bn. PAT declined by 22.8% to Rs738mn.

Q2FY26 Concall Highlights

Consumer Durables to grow 13–15% in FY26: AMBER’s Consumer Durables declined by 18.4% in Q2FY26. The RAC industry declined by ~35% due to weak weather and deferment of purchase in between announcement & implementation of GST reduction. For FY26, the company expects the RAC industry to remain flat and confident of outpacing industry growth, aided by the GST rate cut on RACs (from 28% to 18%), which is expected to boost demand and premiumization.

* AMBER projects its Consumer Durables segment to grow 13–15%, supported by the healthy traction in its components business.

* Commercial AC vertical continued its strong growth momentum in FY26. A strategic cooperation agreement with GMCC will ensure consistent compressor supplies for the next 3 years.

* Inventory levels, which were elevated at the end of Q1, are normalizing and are expected to stabilize before Q4FY26. Q4 and Q1 typically account for ~65% of annual AC sales.

* RAC volume is expected to reach 30–35mn units by FY30, from 15mn in FY25, supported by the GST cut rate. With 27% share in AMBER’s manufacturing footprint, the company expects the share to grow in line with industry trends.

Electronics revenue to reach Rs32bn in FY26: Electronics segment is expected to reach Rs32bn in FY26, with the PCBA vertical contributing ~Rs25bn.

* Electronics margins were contracted by 190bps YoY to 5.8% in Q2FY26 due to a 13% rise in copper-clad laminate prices, which accounts for ~45% of raw materials in PCBs, and higher gold costs. The company expects Electronics margins to improve to 8–9% for FY26. Segment-wise margins are as follows: PCBA at 5–5.5%, PCB at 17–19%, Unitronics (acquired company) at 25–28%, and Power-One (acquired company) at 15–18%.

* Electronics division, which began as a Consumer Durables-focused business, has grown significantly through organic expansion. PCBA vertical remains the key revenue driver, contributing ~85% to the division’s revenue, with 58–60% still linked to Consumer Durables. The company is diversifying into automobiles, energy meters, defense, and telecom, and expects the Consumer Durables contribution to reduce to 40–45% by FY27.

* ILJIN Electronics secured Rs17.5bn from marquee investors, primarily through compulsory convertible preference shares. Of this, Rs3.7bn was received in Sep’25 and Rs2.8bn in Oct’25, while the remaining Rs11bn from Crisp Capital is under approval and expected by the month end.

* ILJIN completed the acquisition of a 60% stake in Power-One Microsystems, enhancing its presence in the fast-growing battery energy storage, solar inverter, EV charger, and industrial UPS segments, catering to large PSUs and corporates. AMBER expects Power-One to generate revenue of Rs2.6-2.7bn in FY26 and post healthy growth going forward.

* ILJIN, through its subsidiary, acquired a 40.2% controlling stake in Israelbased Unitronics in Oct’25, a leading provider of industrial automation and control systems, including PLCs, HMIs, VFDs, and integrated software solutions. The acquisition was made at Rs27/share (ILS27.75). Unitronics will be fully consolidated in the company’s financials as a subsidiary, not as a markto-market investment.

* In the bare PCB segment, two applications were filed under the Electronics Component Manufacturing Scheme—one for multilayer PCBs via Ascent Circuits and the other for HDI PCBs through the Korea Circuit JV.

* Ascent Circuits project, focused on multilayer PCBs, will deliver asset turns of 1-1.1x, with commercial operations commencing in Q3FY26.

* Ascent Circuits project has been approved with an investment outlay of Rs9.9bn, reinforcing the company’s commitment toward India’s self-reliance in electronics manufacturing. Approval for the HDI PCB project is awaited.

* The Korea Circuit JV has received the land allotment LOI from UP government, with approvals expected soon. Construction is set to begin by Jan’27, and revenue contribution from FY28

Please refer disclaimer at https://www.plindia.com/disclaimer/

SEBI Registration No. INH000000271