Hold Amber Enterprises India; target of Rs 2140: Emkay Global Financial

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Emkay Global Financial's report on Amber Enterprises India

Amber recently concluded a QIP of Rs4bn to fund its expansion plans including two greenfield plants for components (both AC and non-AC) and finished goods. The purchase of the residual stake (20%) in Sidwal Refrigeration will also be funded from this. Government’s increased focus on self-reliance and potential import duty increase through phased manufacturing program, should benefit domestic firms. Despite healthy RAC volume growth over the years, component manufacturing ecosystem is a missing link. Amber’s relationship with brands and focus on gaining higher wallet share are working well and management is confident on further increasing the share through component supplies. Low RAC penetration will continue to work in favor of Amber in the medium- to long term.

Outlook

We bake in capacity expansion benefits from FY23 with optimistic revenue assumptions. We value Amber 25x on FY23E EPS to arrive at a revised TP of Rs2,140 and retain Hold rating. RAC industry growth trends and timely execution will be the key monitorables.

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