Amber zooms 28% in 2 days after govt ban on import of ACs with refrigerants

Shares of Amber Enterprises India rallied 17 per cent to Rs 2,545 on the BSE on Monday, zooming 28 per cent in two days after the government banned the import of air conditioners with refrigerants. The consumer electronics company's stock was trading at its fresh record high level.

The government on Thursday banned imports of air conditioners with refrigerants with a view to promote domestic manufacturing and cut imports of non essential items.

Amber Enterprises is the market leader in Indian Room Air Conditioner (RAC) industry and air conditioning industry for mobile application such as railways, metros, buses etc.

Currently, India imports around 1.6 million units (Rs 3,500 crore) of finished RAC that is 22 per cent of total volume sold in India in FY20.

In consonance with our view of contract manufacturers being the biggest beneficiaries under the government’s flagship “Atmanirbhar Scheme”, the recent ban on import of finished room AC (RAC) is likely to create multifold business opportunities for Amber Enterprises, analysts at ICICI Securities said.

The brokerage firm believes Amber being a market leader in the original equipment manufacturer, original design manufacturer (OEM, ODM) industry with volume market share of 70 per cent, is likely to get significant business opportunities from Q4FY21 onwards (considering the immediate restriction on imports).

“Amber Enterprises is well-placed to capture the import substitution benefit on finished products as well as component manufacturing. We estimate Amber’s volume market share to increase to 28 per cent by FY23 from 22 per cent in FY20, driven by increased volumes through import substitution and capacity expansion,” analysts at Emkay Global Financial Services said in company update.

Last month, Amber Enterprises had successfully raised Rs 400 crore through qualified institutional placement by issuing shares at price of Rs 1,780 per share. The company had said that it intends to raise funds for capital expenditure required for the long-term growth of its businesses; extend loans to and invest in its subsidiaries for their long-term and short-term business purposes, repay debt, and make strategic acquisitions or joint ventures.