Buy Amber Enterprises India; target of Rs 8901: Prabhudas Lilladher

Prabhudas Lilladher's research report on Amber Enterprises India

Amber’s Consumer Durables (CD) segment declined 18.4% YoY in Q2FY26; however, the RAC industry witnessed a sharper ~35% decline due to unfavourable weather conditions and purchase deferments ahead of the GST rate reduction implementation. Company expects RAC industry to be flat for FY26; however, CD segment is expected to grow by 13-15% for FY26. Electronics division EBITDA margins contracted by 190bps to 5.8% due to increase in the price of copper clad laminates and gold prices, however company expects margin of 8-9% for FY26. Railway division grew by 6.9% in Q2FY26 and company expects to double the revenue in next two financial years.

Outlook

We cut our earnings estimate by 19.7%/13.4% for FY27/28E and Maintained ‘BUY’ rating and SOTP-based TP of Rs8,901 (Earlier 9,889) valuing its Consumer Durables segment at 26x EV/EBITDA Sep-27E, which implies 24x EV/EBITDA Sep’27E and 51x Sep’27E earnings on consolidated basis. We estimate revenue/EBITDA/PAT CAGR of 20.9%/25.6%/43.8% over FY25-28E with EBITDA margin expanding by ~90bps to reach 8.8% by FY28E.

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