Amber Enterprises Investment Analysis by GNV Ravi Teja
Sharing my view about Amber Enterprises
- Amber has contract manufacturing of Air conditioners for most of the top companies in India
- Recently they have started Micro oven manufacturing as well
- They have 15 production units in various locations which are operational with 75% - 80% capacity utilization
- D/E is 0.21 which is negligible which is good for the company with a positive net cash flow
- FII's hold 24.5 % and Mutual funds hold 9.5 % which is doubled in one year
- 61% of Revenue is from AC units and 39% is from components and digital apps
- Amber enterprises acquired some entities strategically
- They serve various segments like BEL from Defence, DoT from Telecom, MNC's, Buses but the interesting point is they also serve Railway and Metros which has to be noted.
Points to consider
1.Established market position with diversified clientele, consistent growth, backward integration, and complete solution from design till testing.
2. With the growing higher-income population, easy financing options, and the desire for comfortable life growth are significant.
3. Company raised 400 cr via QIP in September 2020
4. Import Ban on air conditioners with Refrigerants will help domestic companies grow faster for the market leaders.
5. ROCE is 17.10% and ROE is 15.70%
6. Majority of their revenues comes from North and south regions on Split AC's
7. Railway Ministry wants to increase more AC coaches and metro coaches which will be a boost for Amber revenues.
8. Management aims to get 10% -15 % from Exports which will be a fast-growth factor
9. Stock gave very good returns for its investors since IPO listing
Decision factors
Strength- Make in India, PLI Scheme, Import Ban, New export opportunities, and entering new segments will be really a positive factor
Threats- Global commodity prices volatility, seasonal business, forex risk, inhouse sourcing
Conclusion- I am already invested in it. It can be the next Dixon for you.
Brother, PE is 159 shall be put into consideration. How would you value the company? The sector has alot to penetrate. But maybe a good price correction is needed to enter into the stock.
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