Though revenues dropped sharply in Q1FY24 on poor volumes (of RAC and components division), margins surged. Structural changes in the manufacturing landscape of RACs have transformed Amber’s business model and the company is pursuing a components-based model, which would drive margin expansion and growth. Company expects a 19-21% ROCE in the next 2-3 years as utilisation levels improve. Company has guided for 30% EBITDA CAGR for the next two years. .
OutlookWe maintain a Buy with a revised PT of Rs. 2,800 (based on FY2025E EPS), as we expect profitability to improve backed by better product profile in RAC division, traction in motors, electronics and mobility division as well as growth in exports.
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