Buy Amber Enterprises; target of Rs 7800: Motilal Oswal

Motilal Oswal's research report on Amber Enterprises

Amber Enterprises (Amber) reported better-than-expected revenue and EBITDA in 3QFY25; however, PAT came in line with our estimate due to losses from subsidiaries. Revenue/EBITDA improved 65%/102% YoY, led by the consumer durables and electronics segments, while railways continued to decline. Consumer durables, particularly the RAC segment, witnessed strong growth, driven by overall healthy RAC demand and client additions. The electronics segment’s performance too remained strong, aided by a strategic focus on increasing diversification and the client base. However, the railways segment’s performance was impacted by delays in offtake and design changes from IR. We expect Amber to continue to benefit from growth in the RAC segment and faster growth in the electronics segment, driven by new client additions, JV with Korea Circuit, and capacity expansion across Ascent Circuit. The company is also planning to participate in the upcoming component PLI scheme via its JV with Korea Circuit, with a focus on tapping a much bigger EMS market. We cut our EPS estimates by 9%/3%/2% for FY25/FY26/FY27 to bake in slower growth in the railways segment. Maintain BUY with a revised DCF-based TP of INR7,800 (from INR7,900 earlier).

Outlook

The stock currently trades at 63.7x/41.4x P/E on FY26E/FY27E earnings. We downgrade our estimates and reiterate our BUY rating on the stock with a DCF-based TP of INR7,800, implying 46x P/E on a two-year forward EPS (Mar’27E).