- 10 Aug 2022
- ICICIdirect Research
Demand for cooling products drives Amber topline but higher input costs drag EBITDA marginAMBER - 1899 Change: 29.80 (1.59 %)
News: The robust demand for cooling products and related components drove a 2.6x YoY growth in Amber's consolidated revenues to Rs 1825.7 crore. Due to a delay in passing on higher raw material prices, the gross margin declined by 241 bps YoY. Savings in employee expenses and other expenses, however, limited the total decline in EBITDA margin at 52 bps YoY to 5.4%. PAT increased 3.8x YoY to Rs 43 crore in Q1FY23 due to higher sales and other income.
View: We believe that Amber's Q1FY23 revenue growth came on a favourable base and strong demand for cooling products. Revenue increased at a CAGR of 14% over the course of three years, driven by customer additions and wallet share gains from existing customers. However, the EBITDA margin at 5.4%, is 230 bps lower than its pre-Covid level, resulting in a sluggish recovery in the bottom line. Going forward , we believe that price hikes and an improved product mix will be the key triggers to watch for the company's overall profitability recovery.