Electronics, Trending in the Economy

Amber Enterprises India Ltd – Innovating the Future of Electronics

Amber Enterprises has ~70% share of the total outsourced RAC manufacturing business in India.

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(A) About

Amber Enterprises Ltd - Blog and Stock research

Company design and manufacture complete RACs including window air conditioners and indoor units and outdoor units of Split air conditioners (SACs) with specifications ranging from 0.75 ton to 2 ton, across energy ratings from 1 ton to 2 ton.
It also design and manufacture Inventor RACs on ranging from 1 ton to 2 ton. Besides this the company manufacture critical and reliability and reliability functional components of RACs such as heat exchangers, motors, inverter and non-inverter printed circuit boards and multi-flow condensers.

In addition, the company manufacturers components for other consumer durables and automobiles such as case liners for refrigerator, plastic extrusion sheets and printed circuit boards for consumer durables and automobile industry, sheet metal components for microwave, machine tub assemblies and for automobiles and metal ceiling industries.

(B) Journey

(C) Shareholding Pattern

Amber - Shareholding Pattern

(D) Board Members

Amber - Board Members

(E) Product Segment

Amber - Product Segment

(i) RAC

Amber designs and manufactures complete RACs, including Indoor Units (IDU), Window ACs (WDU) and Outdoor Units (ODU) of Split ACs with specifications ranging from 1 ton to 2 tons, across energy ratings and types of refrigerants. The Company manufactures both fixed speed as well as inverter ACs.

(ii) Components RAC & Non-RAC

Amber manufactures reliable functional RAC components like Heat Exchangers, Copper System Tubing, MultiFlow Condensers, Sheet Metal Components, Injection Moldings, Cross Flow Fans, ODU Fans etc. The Company also manufactures other Non-AC components like Vacuum Formed Components, Plastic Extruded Sheets, Sheet Metal Components, Injection Molding Components for refrigerators, washing machine and microwave ovens.

During the year the Company has made two new acquisitions for this division i.e., Amber PR and Pravartaka Tooling which will foster business traction and provide integrated business solutions to our customers from this division.

(iii) Mobility

Amber offers a wide range of mobility products, including Roof Mounted AC for Mainline Coaches, AC & Refrigeration solutions for Railways, Roof Mounted Loco Drivers’ Cab AC and also offers Defense HVAC Products.

(iv) Electronics

The Company dominates the market for printed circuit board assembly. Further, it has expanded the division's clientele and began producing cutting-edge products like intelligent smartwatches and wearables.

(v) Motor

Amber produces various motors for HVAC products, fan coil units, AHU, etc. Meanwhile, the Company has increased the range of products offered to its clients by introducing new models for home and foreign markets. In addition, it added items for the markets for washing machines, BLDC fans, and refrigeration.

(F) Revenue Segmentation

Amber - Revenue Segment

(G) Cost Structure

Amber - Cost Structure

(H) Financials

Amber - Financial Trend

Company has grown its revenue at 21.69% in past 10 years, while PAT grew at a CAGR of 22.25%. Company has reduced its debt to equity in the past 10 years.

Moreover company plans to reduce its net debt by Rs 200 Cr in FY24. Currently company's Net debt stood at Rs 1343 Cr.

Amber - Du Pont Analysis

(G) Management Discussion & Concall

Sector Outlook

- Indian Appliances and consumer electronics industry is expected to double to reach Rs 1.48 lakh Cr by 2025. The market size of AC is also expected to grow to 165 lakh units by 2025.

- Huge untapped market with substantially low penetration of consumer appliances compared to other countries.

- The growth in the AC segment is expected on the back of rising urbanization, increasing disposable income of the middle class population, easy consumer credit, wide usability of online sales and also decreasing replacement cycle.

- Meanwhile, government initiatives like rural electrification, its offer PLI scheme and make in India initiatives are expected to bode well for the sector.

- However, ban on import of refrigerant filled RACs opens up a significant opportunity for the outsourcing industry.

Market Share

Value market share in RAC & Non RAC components also improved from 26.6% in FY22 to 29.4% in FY23. Meanwhile, company has ~27% market share in motors.

Company is also the largest player in sheet metals with a market share in the range of 35-40%. And also has the market share of ~25% in cross flow fans.

Concall Highlights

- Expects muted growth in RAC segment in Q1FY24 due to unseasonal rains.

- During the quarter electronics division seen the growth b/w 25-30%. Moreover company expects 50-100 bps margins expansion from electronics division.

- Meanwhile, management expects ROCE to be in the range of 19-20% in thee next 3 years.

- The company expects exports orders to inflow in FY24 and is also looking to add two new customer during the current fiscal.

- The company’s overall capacity utilization is at 65-70%. Moreover, currently capacity utilization at its new greenfield facility in Sri City is ~20% and is expected to go up to 35-40% in FY24.

(H) SWOT Analysis

Amber - SWOT Analysis

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References:  Annual Reports, News Publications, Investor Presentations, Corporate Announcements, Management Discussions, Analyst Meets & Management Interviews, Industry Publications.

Disclaimer: The report only represents the personal opinions and views of the author. No part of the report should be considered a recommendation for buying/selling any stock. Thus, the report & references mentioned are only for the information of the readers about the industry stated.

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