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Ambers acquires cross flow manufacturer Pasio

News: To strengthen its component business, Amber has acquired 73% stake in “Pasio India Pvt Ltd” for a consideration of Rs.30 crore.

Views: Pasio is the market leader in the cross flow segment with ~ 25% market share. Pasio is likely to clock revenue of Rs.80 crore in FY22 (up 54% YoY) with EBITDA margin of ~15%. Company’s marque client includes major players such as LG, Voltas, Havells, Amber etc. Cross flow fan is the critical component of AC, hence it’s approval cycle is longer. We believe, while the acquisition is small but the major benefit for Amber is getting direct access to new clients without much delay. Also, Pasio’s EBITDA margin is double that of Amber’s existing EBITDA margin of ~7%. Considering its future revenue growth (CAGR of 25%) and higher margin profile, we believe the acquisition at 5.4x EV/EBITDA is lucrative for Amber.

Impact: Neutral