The strong debut of KRN Heat Exchanger on the bourses may have sparked investor interest in the shares of another, much bigger related play - Amber Enterprises - which has surged nearly 5% in early trade on October 3.
KRN Heat Exchangers, rising more than two-fold on debut, has a market capitalisation of around Rs 2,200 crore. Amber Enterprises has a market capitalisation of Rs 17,400 crore and the shares have delivered a return of 64% on YTD basis.
Amber manufactures complete Room Air Conditioning (RAC) solutions of various specifications and ratings, along with printed circuit boards (PCBs), and is expanding capacity in this space.
Earlier on October 1, Amber Enterprises had signed an agreement with subsidiary AmberPR Technoplast, to purchase the business via slump sale at book value. The transaction is a related party transaction, conducted at arm's length, said Amber Enterprises.
AmberPR Technoplast is into the manufacturing of high-performance plastic components for automotive, electrical, and industrial applications. These plastic products are typically used for precision applications that need durability and design flexibility.
The agreement is expected to streamline operations and boosting business flexibility at Amber Enterprises, and four major benefits were cited for the deal:
1. Optimum utilization of resources
2. Optimization of business processes
3. More absolute comparison with industry peers
4. More flexibility to expand in B2B space
Amber Enterprises also said in a separate filing that it is meeting investors and analysts on October 4.
Amber Enterprises is looking at a consolidated revenue growth of almost 25% this year, the company said during the June earnings call. Due to a prolonged summer this year, the air conditioning industry saw an unprecedented demand in the June quarter, recording a growth of over 35% in the first half of the calendar year. Amber Enterprises saw a growth of 50% in the RAC business while the non-RAC vertical grew by 39% in the June quarter. It has also signed up a JV to make washing machines, and aims to start production from second half of 2024.
A recent Sharekhan note had said that India's AC penetration is expected to improve significantly, and Amber's volumes are likely to clock a 30% CAGR going forward.
Global brokerage Jefferies had maintained a 'Buy' on Amber's stock last month in a note, projecting a 19 percent upside potential.
A recent Moneycontrol Pro piece ahead of the public issue had projected KNR has a reasonably valued business in the light of growth and quality it offered in this niche space.
The IPO of KRN Heat Exchanger had received an overwhelming investor response with over 213 times subscription for the Rs 342 crore IPO.
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