Amber is a leading solution provider for air conditioner OEM/ODM industry in India.
· The company has a product portfolio including RACs, RAC components and other non AC components
· Derives ~50% of its revenues from RACs and the rest from components and mobility applications
Component business drove topline, higher input cost dragged margin.
Amber’s share price has appreciated at 24% CAGR over the past four years (from ~₹ 1140 in May 2018 to ~₹ 2710 levels in May 2022).
We revise our target price to ₹ 3050/share and value Amber at 35x P/E FY24E EPS.
We like Polycab in our coverage universe.
|(Rs# Crore)||FY19||FY20||FY21||FY22||4 Year CAGR(FY18-FY22)||FY23E||FY24E||2 Year CAGR (FY22-FY24E)|
Q4FY22 Earnings Conference Call highlights:
|Q4FY22||Q4FY21||YoY (%)||Q3FY22||QoQ (%)||Comments|
|Revenue||1936.7||1598.4||21.2||974.3||98.8||Seasonal demand of RAC coupled with strong component sales helped drive overall revenue growth in Q4|
|Raw Material Exp||1669.9||1344.9||24.2||796.2||109.7||Delay in price hike led to 208 bps YoY decline in gross margin|
|Employee cost||42.7||29.7||43.7||39.7||7.8||Higher employee expenses is due to one time ESOP expenses of ~| 4 crore in Q4FY22|
|Other Expenditure||98.8||82.6||19.6||64.8||52.5||Higher fixed cost is attributable to start of new capacities|
|EBITDA Margin (%)||6.5||8.8||-236 bps||7.6||-109 bps||Sharp increase in employee expenses along with lower gross margins dragged overall EBITDA margin|
|PAT||59.3||76.5||-22.5||32.9||80.0||Sharp decline in PAT is largely due to lower EBITDA margin and higher interest costs|
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