Amber Enterprises plunges 7% on profit booking post Sept quarter results

EBITDA margins declined 134 basis points to 4.8 per cent in Q2FY21 due to de-operating leverage playing out considering the dip in revenues

Shares of Amber Enterprises slipped 7 per cent to Rs 2,155 on the BSE in the early morning trade on Monday as investors booked profits on the stock after the company reported disappointing SEptember quarter results. Its profit after tax plunged  77 per cent to Rs 3 crore in Q2FY21 due to lower revenues. The consumer electronics company had clocked a profit of Rs 12 crore in the year-ago quarter. It posted a net loss of Rs 24 crore in June quarter of FY21.

With today's fall, the stock of Amber Enterprises has corrected 15 per cent from its all-time high level of Rs 2,544 touched on October 19, 2020. In the past six months, however, the market price of the company has more-than-doubled at the bourses, as compared to a 34 per cent rally recorded by the S&P BSE Sensex.

In Q2FY21, the company's EBITDA (earnings before interest, taxes, depreciation, and amortisation) margins declined 134 basis points to 4.8 per cent due to de-operating leverage playing out considering the dip in revenues.

Revenue from operations, meanwhile, declined 35 per cent to Rs 408 crore from Rs 623 crore in the corresponding quarter of previous fiscal. The lower demand in room air conditioning (RAC) segment led to subdued revenues for Q2FY21.

However, after almost a washedout Q1FY21, Amber Enterprise reported a good recovery in topline led by increase in the sales of RAC and component and mobility division respectively.

The management said RAC, consumer durable and electronics industry have witnessed a positive momentum in Q2FY21. The channel inventory levels are back to normalized levels and should anticipate good growth for October-March (H2FY21).

According to a recent notification by the Directorate General of Foreign Trade (DGFT), imports of air conditioners with refrigerants have been prohibited. The management believes this will open up opportunities for domestic manufacturing as now importing completely build units (CBU’s) without refrigerants will be cost ineffective.