Domestic brokerage firms have retained their existing ratings on Amber Enterprises following the company’s September quarter results. In Q2 FY24, the consumer durable firm reported a net loss of ₹4 crore. This loss was primarily attributed to a significant increase in depreciation cost by 42% year-on-year (YoY) and a 50% YoY surge in finance cost.
During the quarter, the company’s consumer durables business improved 35% YoY to ₹550 crore, while electronics and mobility revenue grew by 3% and 26% to ₹250 and 130 crore, respectively.
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Domestic brokerage firm Sharekhan maintained its positive outlook on Amber Enterprises after its Q2 earnings. The brokerage emphasised that despite the structural change in the RAC (Refrigeration and Air Condition) industry, wherein brands are resorting to in-house manufacturing of finished goods, Amber is well-positioned to capture incremental demand accruing from components ecosystem development.
Sharekhan pointed out that while Amber’s share of RAC finished goods is decreasing, the company is concentrating on RAC and non-RAC components to drive growth and profitability.
Moreover, in the long term, under-penetration of RAC, rising temperatures in India, changing lifestyle patterns, and increasing contribution from Tier II, III, and IV cities would drive the RAC industry’s growth and benefit Amber indirectly, the brokerage highlighted.
Sharekhan has projected a revenue and PAT CAGR of approximately 17% and 37% over FY2023 to FY2026E, respectively. It maintained its ‘buy’ rating on Amber Enterprises’ stock with a target price of ₹3,250 per share, based on the FY2026E earnings per share (EPS).
BOB Capital Markets, on the other hand, continued with its ‘hold’ rating on the stock with a target price of ₹2,900 apiece. The brokerage points out that the company saw healthy topline growth due to dry weather in most parts of India during Q2 FY24, which is otherwise an unseasonal quarter for cooling products.
“Amber is entering wearable and hearable telecom products through its joint venture with the smart wearable brand Noise. The company also sees an opportunity to capture printed circuit board assembly (PCBA) demand in India for non-smartphone applications, which is currently met by imports,” said the brokerage.
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Nirmal Bang Institutional Equities Research maintained its ‘accumulate’ rating on Amber with a revised price target of ₹3,135 apiece.
According to Nirmal Bang, the rising share of high-margin businesses such as RAC and non-RAC components and defence, a consistent increase in wallet share, and the significant contribution from high-growth divisions like electronics and mobility bode well for return ratios.
Another domestic brokerage firm, ICICI Securities, also retained its ‘hold’ rating on the stock, setting a target price of ₹2,920 apiece.
The stock closed 1.10% lower at ₹2,942 per share on the BSE today.
Disclaimer: The views and recommendations given in this article are those of individual analysts. These do not represent the views of Mint. We advise investors to check with certified experts before taking any investment decisions.
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Updated: 26 Oct 2023, 06:27 PM IST