Amber Enterprises Q3 Results Review - Systematix Upgrades To 'Buy', Hikes Target Price; Here's Why

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Systematix Research Report

Amber Enterprises India Ltd. continued to post stellar results (Q3 revenue/Ebitda surged 65%/102% YoY, ~20% beat; PAT at Rs 359 million versus loss of Rs 5 million in Q3 FY24).

Consumer Durable Q3 revenue (up 68% YoY) was led by RAC channel inventory filling in anticipation of positive summer season. Amber Enterprises converted a big MNC customer from gas charging to full ODM/OEM solution during the year.

Focus is on diversification of offerings into more margin accretive component space. In Electronics (Q3 revenue up 96% YoY), Ascent facility expansion coupled with JV with Korea Circuit for HDI, Flex and Semiconductor substrate printed circuit boards will pave the way for growth.

Management is confident to double consolidated revenue in three years driven by all the three segments. RAC industry is expected to grow at 25%+ YoY in FY25E; Amber will outgrow aided by onboarding of new large customers.

In electronics, revenue growth guidance is revised upward to 55%+ for FY25, looking into the current order book. Ebitda margins expected to be ~8% in FY25 (10%+ in one-two years). For railways and defence, Amber remains optimistic of revival starting in H2 FY26 (20%+ YoY) and strong growth in FY27 and beyond, backed by Rs 20 billion+ order book and product expansion.

Overall capex of ~Rs 12 billion is planned across segments (durable 2.5 billion, electronics 6.5 billion, railway 3.5 billion). After a strong Q3 and robust management guidance, we increase revenue/PAT estimates by 3-6%.

We now expect 32%/38%/69% CAGR in revenue/Ebitda/PAT over FY24-27E (FY19-24: 20%/18%/7%). Product portfolio expansion through strategic initiatives including Ascent’s new PCB plant expansion and joint venture with Korea Circuit will help to attain new scale for the company. Backward integration and superior mix will drive margins, ~22% RoCE and ~25% RoIC in FY27E (key to sustain valuation re-rating).

After recent correction in stock price, we upgrade rating to Buy with Rs 8,480 TP (45x FY27E P/E), earlier Rs 8,217.

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