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Last Updated : Jan 17, 2018 09:10 AM IST | Source:

Amber Enterprises IPO opens today. Should you subscribe to the issue?

Brokerage houses largely recommend subscribing to the issue, citing reasonable valuations as well as that of having a good track record.

The IPO flurry in the primary market has continued, with Amber Enterprises set to open its initial public offering (IPO) on Wednesday.

The appliance maker will open its Rs 600-crore initial public offering with a price band at Rs 855-859 per share.

The public issue comprises a fresh issue of equity shares aggregating up to Rs 475 crore and an offer for sale of up to Rs 125 crore by promoters Jasbir Singh aggregating up to Rs 62.5 crore and Daljit Singh up to Rs 62.5 crore. The issue will close on January 19.

Bids can be made for a minimum lot of 17 equity shares and in multiples of 17 shares thereafter.

Company intends to utilise the net proceeds from the fresh issue towards prepayment or repayment of all or a portion of certain borrowings and general corporate purposes.

Brokerage houses largely recommend subscribing to the issue, citing reasonable valuations as well as that of having a good track record.

ICICI Securities | Rating: Subscribe

The brokerage said the issue is fairly valued. “However, the outlook on the company is positive considering strong demand for white goods products in India. AEL is the market leader in the RAC ODM/OEM industry in India with a volume market share of 55.4 percent in FY17,” the brokerage house said in a report.

Further, strong growth prospect of the RAC industry in India, strong clientele base (commands 75 percent market share of total RAC market in India), coupled with an increase in plant utilisation and improvement in return ratios (post IPO company will be debt free) provide sufficient margin of safety at higher end of the subscription price.

SMC Research | Rating: 2.5/5

The brokerage said the firm has 11 manufacturing facilities at 7 strategic locations and thus enjoys proximity of its prime customers. To stay tuned with the futuristic requirements, it keeps spending on R&D and backward integration.

“While increasing temperature will bring more demand, adequacy of power supply help for faster advancement of RAC markets domestically. Thus, it is expected that the company would see good growth going forward,” the report said.

AUM Capital | Rating: Subscribe

The brokerage said the company is one of the leading RAC OEM/ODM manufacturer in India with strong customer base.

“AEIL’s emphasis on R&D to develop, design and manufacture models of RACs, experience team and multiple manufacturing locations allow them optimal utilisation of facilities,” the report said, adding that it is assigning subscribe to the the issue for medium to long term perspective.

Hem Securities | Rating: Subscribe

Hem Securities said the firm is bringing the issue at p/e multiple of 49 on annualized H1FY18 EPS at higher price band of Rs 855-859/share. “The company being market leader in RAC OEM/ODM industry in India have reputed clientele with strong track record of financial performance,” the report said, adding that looking after strong future prospects of firm with decent fundamentals, a subscribe rating is recommended.

Angel Broking | Rating: Subscribe

Angel Broking believes on the valuation front, at the upper end of the price band, the P/E multiple works out be 80x (pre issue equity base) of FY17 EPS which prima-facie looks on the higher side.

“However, considering future earnings growth trajectory to be very robust (FY19 earnings expected to be 4x of FY17 earnings); we feel that the stock would trade at ~22-25x (post issue equity base) on our rough EPS for FY2020 which looks very attractive,” the brokerage said in its report.

Its closest peer - Dixon Technologies is trading at higher valuation of 30x FY20 earnings.
First Published on Jan 17, 2018 08:41 am
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