Amber Enterprises India Ltd. (Amber) is the market leader in the room air conditioners (RAC) outsourced manufacturing space in India. 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. Its growing manufacturing capabilities and scale put it in a sweet spot to capture the underpenetrated RAC market in India.
Outlook & Valuation: We expect Amber to report consolidated revenue/PAT CAGR of 28%/51% respectively over FY2018-20E. It is currently trading at 21x FY 2020 earnings which is at 25-30% discount than its closest peer – Dixon Technologies. The recent correction has provided a very good entry point for the investors to take a bet on the booming AC space. Hence, we initiate coverage on the stock with a BUY recommendation and Target Price of `1272 (28x FY2020E EPS), an upside of 32% from the current levels.
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