Amber Enterprises Ltd Stock Analysis | Amber Enterprises Ltd Share | nse

“Amber Enterprises Ltd: The Hidden Giant Powering India’s Electronics Boom!”

The electronic industry is one of the key pillars for economic growth of a country. While India is targeting a strong growth in this sector to achieve a CAGR of 26% every year for a forecasted size of the industry to be reach at $ 500 billion by 2030. Many few of us know, that the EMS firms are at the Centre of this transportation due to India’s electronic revolution. This is the reason why the Government of India had taken “Make in India” initiative backed by PLI Scheme, so that Indian EMS firms could lead the country as a global contact manufactures competing with several countries like China, Taiwan & Vietnam, to make India a global electronic powerhouse.

One of the companies leading this transformation is Amber Enterprises Ltd, which holds strong market position with its 25% market share in the RAC OEM in domestic market. Over the time, the company has made several acquisitions to enter & lead in various segments of the electronic industry. For instance, they acquire Sidwal Refrigeration for its strong presence in railway & defense HVAC solutions.

About the Company

Amber Enterprises Ltd is specialized in original Equipment Manufacturing (OEM) & original design manufacturing (ODM), and it is prevailing the domestic heating, ventilation, & air conditioning (HVAC) industry. The company has strong and efficient manufacturing capabilities and have strong hold on entire value chain through its more than 25 factories across the country. The company fulfills the demands of several national & international companies like Voltas, Blue Star, Godrej, LG, Whirlpool, Samsung, Hitachi, Panasonic & Daikin for the contact manufacturing of RAC. The company has perfectly positioned itself for the international brands to expand their supply chain for South Asia to reduce their dependency on China. The company had done a capex of over ₹1,100 crore in the last two financial years and has allocated ₹270 crore for FY 24 along with ₹380 crore in their new integrated manufacturing units.

Financial Performance and Growth Prospects

Amber Enterprises Ltd has delivered a consistent sales growth of 20% for the past 5 years. The factors such as India’s rising temperature, growing urbanization & increasing disposable income are the major growth driving factors for the company’s revenue. The consumer durables are the major source for the company’s revenue, contributing about 80% of the total revenue, followed by electronics – 16% and railway sub-system & mobility – 4%. According to the management the RAC contribution is expected to go down to 28 – 30% comparing it with 72% in 2018, this is due to diversification of their business.

As far as the future growth is concerned, the company seems to experience a robust growth ahead for their RAC business. This is because the AC penetration in India is only 7-8% even being the country experience the hottest summers and warm climate throughout the year. Just for the context the AC penetration in China in nearly about 60% and in the United States is nearly 90%. This shows the tremendous untapped potential in the domestic market, which is expected to grow at a CAGR of 12-15% throughout the next decade.

In addition to this, the Government of India is pushing for the large-scale production of white goods by offering various subsidies through its PLI Scheme, the company may find itself to easily cater the high margin electronics & smart appliances.

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Company's Bold Move Through Acquisitions

The company had also made a bold move by acquiring the Sidwal Refrigeration to diversify its business in railway & defense sector to get sustainable business growth ahead as well as to reduce dependency in consumer durables.

The company acquires PICL India Pvt Ltd, which is specialized in manufacturing energy-efficient motors, which are used in refrigerators, washing machines, ACs & industrial ventilation systems. It helps the company to secure its backward integration to improve its margins & reduce the dependency on Chinese imports.

The company acquire 60% stake on august 2021, in Ever Electronics Pvt and 80% stake in Il Jin Electronics in January 2021. Both are proficient in making printed circuit board (PCBs) for inverter AC, washing machine, refrigerator and other home appliances. Ever Electronics Pvt is also indulged in electronic sub-assemblies.

The company acquired a majority stake in Pravartaka Tooling Services Pvt Ltd, in 2022. This company works on precision injection molding for the high-quality plastic components used in ACs, refrigerators & other appliances. The bold move by the company enables it to reduce its costs without depending on other tooling venders & also to make sure about quality controls.

The company acquires majority stake in Amber PR Technoplast PVT Ltd, in 2021. This company caters the demand for several plastic components along with Ac front panel, remote control casing & ducts for ACs and other home appliances.

Joint Ventures: Bold Move for Company’s Expansion

JV with Korea Circuit Company Ltd. Amber Enterprises Ltd through its subsidiary i.e. Il JIN Electronics, entered into JV with Korean Circuit Co. For the manufacturing of advanced PCBs, in October 2024. Along with the advanced PCBs, they also collaborate for high-density interconnected (HDI), flexible 7 semiconductor substrate PCBs with its subsidiary holding 70% stake & the remaining 30% by Korean Circuit Co.

JV with Yujin Machinery, Sinkodia Pte, & Dujin International through its wholly owned subsidiary, AT Railway Sub Systems, Amber Enterprises Ltd e3ntered int a JV agreement partnering with Yujin Machinery, Sinkodia Pte, & Dujin International, in April 2024. They would work on critical railway components for high-speed trains, Vande Bharat trains & metro systems. They would also jointly develop, design & manufacture critical components such as driving fears, couplers, & pantographs.

JV with Resojet Pvt Ltd for diversifying the company’s consumer durables portfolio, Amber Enterprises entered in 50:50 JV with a Telangana-based Resojet Ltd, in November 2023. This OEM company would help Amber Enterprises to enter automatic washing machine segments through its expertise in it.

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Risks and Challenges for the Amber Enterprises Ltd

The company has several uncertainties and obstacles to deal with. One of the major beings is to deal with the raw material volatility, which is capable of decline the company’s margin. Another one is the custom duty on Chinese import and client concentration. Although the Indian Government would never let the Chinese company to disrupt the domestic market through cheap Chinese imports by applying heavy tariffs, but still, it is considered as one on the major treat for the company. And lastly, the company is highly dependent on its HVAC business which is responsible for contributing about 65-70% to its total revenue.

Frequently Asked Questions

1. Is the company having any JV with Titagarh Rail Systems Ltd?

The company announces on January 2024, a 50:50 JV with Titagarh Rail Systems Ltd, for the railway components and subsystems, each of them investing ₹120 crore.

2. How much market share does Amber Enterprises Ltd holds in AC manufacturing?

The company hold 70% market share in the manufacturing of AC.

3. What is the current order book of and revenue target of the company?

The current order book of the company stood at more than ₹2,000 crore and targeting the revenue to be double by the year 2027 i.e. ₹100 crore.

DISCLAIMER: we are not SEBI –registered, all the above information is for education purpose only, consult with your financial advisor or do your own research before investment.