Amber Enterprises is a contract manufacturer of Room Air Conditioners (RAC) and a market leader with ~22% share in overall RAC manufacturing and ~55% share in RAC contract manufacturing. It is expected to be a key beneficiary as the AC outsourcing mix is expected to improve from the current 38% to ~50% on back of a CAGR of 15%-17% for the AC industry over the next 5 years We expect it to grow faster than the industry over this period due to its large customer base (customers have cumulative share of ~75% of the AC market in India).
OutlookGiven the recent stock price run up, we initiate coverage with a Reduce, valuing the stock at 32xFY22E, giving us a target price of Rs1900. However, we like the structural story and would recommend the stock should further price correction occur.
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