- Amber Enterprises expects 50-100 bps margin pressure in FY27 due to cost increases
- Higher wages and raw material costs impact consumer durables and electronics divisions
- PCB business faces slower price hikes due to its Tier-2 supplier status
Amber Enterprises India Ltd. expects margin pressure of 50 basis points to 100 basis points in FY27 as higher wages, rising raw material costs and currency depreciation weigh on its consumer durables and electronics businesses despite a recovery in room air-conditioner demand.
The company said higher minimum wages in north India, rising prices of copper-clad laminate and gold, and currency movements are increasing cost pressure across divisions. Management also said price increases in the printed circuit board business take longer to pass through to customers compared with the RAC business. The comments sent shares sliding by as much as 17.6% to Rs 6.980.
"We expect a margin pressure of 50, 100 bps at consolidated level, which is temporary in nature and expected to normalize as macro environment improves," Executive Chairman Jasbir Singh said during the company's post-earnings call.
The comments come even as Amber guided for stronger demand in the RAC industry during FY27. The company expects industry volume growth of 12%-13% for the full year and around 20% growth in the June quarter because of a weak base and rising temperatures from mid-April onward.
Wage, Input Costs
Amber said Haryana increased minimum wages by 35%, while Uttar Pradesh raised wages by 22%, adding pressure on manufacturing costs across plants.
The company also said prices of copper-clad laminate used in PCB manufacturing have risen more than 60% over the past year, while gold prices have increased by about 60% during the same period. "On the margins front, prevailing high commodity prices, currency depreciation, and minimum wage revision in UP and Haryana poses handwinds in the consumer durable and electronic division," Jasbir Singh said.
Amber said the PCB business faces slower cost pass-through because it operates as a Tier-2 supplier and does not directly supply to automobile manufacturers. "In the PCB business, we are Tier 2," Jasbir Singh said. "The lag in the PCB business to increase the cost is about two quarters."
The company said it has started seeking price revisions from customers more frequently because of volatile input costs. "But because of these things we have started meeting them very often," Singh said while discussing pricing negotiations with customers.
Capex Push
Amber also indicated that its electronics expansion will remain capital-intensive over the next two years as it builds PCB manufacturing capacity. The company said FY27 capital expenditure could reach Rs 1,800 crore to Rs 2,000 crore, including spending on Ascent and Ascent-K Circuit projects. Amber expects FY28 cash outflow for capex to remain at Rs 1,400 crore to Rs 1,500 crore.
"These are all asset-heavy businesses where the capex is going, largely the printed circuit boards," Jasbir Singh said.
Amber's electronics division reported FY26 revenue growth of 49% to Rs 3,268 crore, while operating Ebitda rose 89% year-on-year to Rs 287 crore. The company expects the electronics business to grow around 40% in FY27 with margins of 9.5%-10%, management said during the call.
The consumer durables division grew 14% in FY26 despite a flat RAC industry, the company said.
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