Hold Amber Enterprises India; target of Rs 2297: ICICI Securities

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ICICI Securities research report on Amber Enterprises India

Unseasonal rains in North India in Apr’23 have impacted the revenue growth rates. However, we note Amber has gained market shares and reported revenue decline of just 6.8% vs industry revenue decline of 20-25% YoY. The strategy to focus on components business is working well. It has been able to partially arrest volume decline and expand margins. Considering elevated channel inventory, the RAC industry is expected to revive only in Q4FY24. While change in revenue mix, operating leverage and PLI benefits are likely to expand margins in FY24, we note the return ratios are still lower than cost of capital.

Outlook

Hence, the EVA creation is still muted. We believe the stock price upside is capped at current valuations and maintain HOLD with DCF based TP of INR 2,297 (implied P/E of 28x FY25E EPS).

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Amber Enterprises India - 27 -07 - 2023 - isc