Amber Enterprises India Ltd

Published on 15th January 2018
Technology

Amber Enterprises India Ltd. (Amber) is the market leader in the room air conditioner (RAC) outsourced manufacturing space in India with a market share of 55.4%. It is a one-stop solutions provider for the major brands in the RAC industry and currently serves eight out of the ten top RAC brands in India including Panasonic, LG, Daikin, Hitachi, Whirlpool, Voltas, Blue Star and Godrej.
Outlook & Valuation: At the upper end of the price band, the P/E multiple works out be 80x (pre issue equity base) of FY17 EPS which prima-facie looks on the higher side. However, considering future earnings growth trajectory to be very robust (FY19 earnings expected to be 4x of FY17 earnings); we feel that the stock would trade at ~22-25x (post issue equity base) on our rough EPS for FY2020 which looks very attractive. Its closest peer - Dixon Technologies is trading at higher valuation of 30x FY20 earnings. We recommend ‘SUBSCRIBE’ on the issue for a mid-to-long term period.

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