Buy Amber Enterprises; target of Rs 3012: Anand Rathi

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Anand Rathi's research report on Amber Enterprises

Amber is set to emerge as the primary beneficiary of the government’s steps on air-conditioner imports. The industry estimates ~ 2.7m units are imported, of which ~70% are filled with refrigerants. After the notification, Amber added four OEM clients and is adding a few more. The full benefits of an expanding client list will be visible in FY22. With its two new factories expected to be commissioned by FY22, Amber can benefit from further policy support in the form of production-linked incentives (PLI) for components. We raise our estimates significantly and move our target to 30x FY23e EPS (from SOTP earlier), taking into account synergy/interlinks of the integrated model.

Outlook

We have raised our FY21eand FY23e to factor in greater volumes as the two factories would be operational by Q4FY22. We now model FY21- FY23 revenue/PAT CAGRs of 36%/86%, resulting in RoCE (after tax) rising to 13.5% (from 6.6% in FY21).We value the stock at a consolidated PE of 30x FY23 EPS of Rs100.4 (from SOTP earlier). We maintain a Buy.

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