Amber Enterprises: Is the Street gung ho about electronics manufacturing biz?
Subscribe to enjoy similar stories. Shares of Amber Enterprises India Ltd hit a new lifetime high of ₹5,361 on Tuesday before ending the day 4% lower. The company is known for its contract manufacturing of consumer durable products, particularly air conditioners (AC).
As Amber Enterprises looks to increase its revenue from the electronics manufacturing services (EMS) sector, it is possible that the Street is comparing Amber’s valuation to companies like Dixon Technologies (India) Ltd. However, Amber’s EMS revenue remains relatively small, contributing just 19% to its FY24 revenue of ₹6,729 crore. The bulk of its revenue—75%—still comes from consumer durables, with the remainder from its railway subsystem and mobility businesses.
Read this | India’s domestic consumer electronics market closes in on $100-bn valuation The company expects the AC industry to grow 30% in FY25 and anticipates a compound annual growth rate (CAGR) of 17% in AC sales over the next seven years, driven by increasing market penetration and rising temperatures. In the June quarter (Q1FY25), Amber’s consumer durables revenue grew 44%, compared to a 30-40% growth in the domestic AC industry, according to estimates from the Consumer Electronics and Appliances Manufacturers Association (CEAMA). Amber’s EMS division has been attracting new customers after the imposition of anti-dumping duty on printed circuit boards.
EMS revenue growth was 45% in Q1FY25. Amber acquired a 60% stake in Ascent Circuits in January, which helped strengthen its EMS portfolio with backward integration. As such, EMS revenue growth can be strong for the full year, too.
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