Buy Amber Enterprises; target of Rs 10,050: Anand Rathi

Anand Rathi's research report on Amber Enterprises

Strong beat on all fronts, with broad-based growth. Sharper RAC growth vs brands indicate continued shift to outsourcing though high channel inventory (~2.2m-2.5m vs. 1m-1.2m norm) could dampen near-term momentum. That said, Amber is likely gaining share, with E-pack reporting a steep 34% y/y decline. Electronics was strong, driven by robust PCBA growth, with two recent industrial EMS acquisitions set to further scale up abilities and expand margins. Rs42bn capex under ECMS for PCBs and HDI set to unlock strong growth and sharp margin expansion in 4-5 years, with RoCE projected at 20–25%. Potential fundraise or partial Electronics stake sale could make Amber net-debt free by FY27.

Outlook

Strong 25.4%/53.7% revenue/earnings CAGRs over FY25–28, driven by margin- and RoCE-accretive growth in Electronics and Railways should lift RoCE to ~19.4% (from 12.1%). We retain a Buy with a TP of Rs10,050 (45x Sep’27e EPS).