 "Amber Enterprises stock up 62% in one year; PL Capital sees more 35% upside")
PL Capital has initiated ‘Buy’ on Amber Enterprises setting its target at ₹9,782 per share, which implies an upside of 34.7 per cent from Friday's close at ₹7,259.6 per share. The valuation framework implies around 24x EV/Ebitda Sep-27E and 50x Sep-27E earnings for the relevant businesses, the report said. Ebitda refers to Earnings before interest, tax, depreciation, and amortisation.
Further, it estimates revenue/Ebitda/PAT compound annual growth rate (CAGR) of 22.8 per cent/27.9 per cent/49.6 per cent over FY25-27E with Ebitda margin expanding by 65 basis points (bps) to reach 8.3 per cent by FY27E.
At 10:36 AM, Amber Enterprises' share price were trading 3.2 per cent higher at ₹7,492 per share. In comparison, BSE Sensex was up 0.31 per cent at 80,055.61.
In the past one year, Amber Enterprises' shares outperformed the headline index by rising 62 per cent, as compared to Sensex’s fall of 2.5 per cent READ STOCK MARKET UPDATES LIVE
Here’s why PL Capital is upbeat on Amber Enterprises Stock:
The brokerage believes Amber Enterprises is poised for healthy long-term growth on the back of diversification beyond room air conditioners (RACs), capacity expansion and new market entries.Consumer durables — diversifying away from RACs
The brokerage believes that Amber Enterprises is strategically diversifying its consumer durables segment beyond RACs through organic initiatives and acquisitions, including a 50:50 joint venture with Resojet to enter fully automatic top- and front-load washing machines. The move is expected to lift capacity utilisation, expand the product mix, and raise non-RAC revenue share to 18.3 per cent by FY27E.
Cumulative capex of around ₹2,100 crore over FY21–25 is expected to help expand facilities and grow components and other product revenues to roughly 30–32 per cent of the segment. The segment is forecast to deliver a 17.1 per cent revenue CAGR over FY25–27E with Ebitda margins widening by about 80 basis points.
Electronics — building full-stack EMS
PL Capital is bullish on the company scaling its electronics business through backward integration, new product lines such as High-Density Interconnect (HDI) and semiconductor substrates, and diversification across applications. Supported by a strong ₹5,000 crore order book, the company plans ₹650 crore capex in Ascent Circuits and a total ₹3,000 crore investment in electronics over the next five years, the brokerage note. ALSO READ | Nuvama sees pressure on Bharat Forge, SAMIL, others on muted demand outlook
Additionally, management expects electronics margins to improve from 7 per cent in FY25 to 10–12 per cent within 2–3 years. The report projects a 41.2 per cent revenue CAGR for the segment over FY25–27E, a 125-bp expansion in Ebitda margin, and a 53.3 per cent Ebitda CAGR.
Mobility — order book and execution focus
Amber Enterprises anticipates its mobility segment to grow at a 17.3 per cent CAGR over FY25–27E, underpinned by a ₹2000 crore order book, product expansion, and revival of delayed projects such as Metro and Vande Bharat, which is a positive according to PL Capital.
Further, the company’s aim is to capture 28–30 per cent of the bill-of-materials per railway coach and reach an 18 per cent Ebitda margin, which is also impressive. Growth initiatives such as greenfield expansions, joint ventures with Yujin and Titagarh, deeper integration into rail subsystems, and pursuing defence exports will benefit the company in long-term, reckons the brokerage.