AMBER - Amber Enterprises India Limited Share Price

Management Outlook and Key Points:

1. Financial Performance:

• Q3 FY25: Revenue grew 65% YoY to Rs.2,133 Cr; EBITDA surged 97% to Rs.162 Cr; PAT turned positive at Rs.37 Cr vs. a loss in Q3 FY24.
• 9M FY25: Revenue up 59% to Rs.6,219 Cr; EBITDA rose 69% to Rs.482 Cr; PAT grew 228% to Rs.133 Cr.

2. Divisional Highlights:

• Consumer Durables (Room AC/RAC, Components, Washing Machines):
  • Blended growth of 67% (RAC: 71%, non-RAC: 43%); EBITDA up 150% to Rs.116 Cr.
  • New commercial AC customer onboarded; washing machine JV trials progressing, mass production expected by H1 FY26.
• Electronics Division (PCBA, Bare Boards):
  • Revenue up 96% to Rs.472 Cr; EBITDA jumped 193% to Rs.34 Cr.
  • Revised FY25 growth guidance to 55%+ (from 45%) driven by telecom, auto, and renewable energy segments.
  • Expansion plans: Hosur facility (production by Q4 FY26), HDI/semiconductor JV with Korea Circuit (awaiting govt. incentives).
• Railway & Defense:
  • Revenue declined 13% (delays in orders); margins impacted by product expansion costs.
  • Order book visibility of Rs.2,000+ Cr; expected margin recovery (18"“22%) by H2 FY26. New projects (metro ACs, defense exports) and greenfield facilities (HVAC, pantographs) underway.

3. Strategic Initiatives:

• Electronics: Targeting global customers; Ascent Circuits' capacity expansion and HDI JV to enhance scale.
• Railway/Defense: Focus on export opportunities; Sidwal's facility (operational by Q2 FY26) to drive growth.
• Consumer Durables: Leveraging PLI benefits; deepening customer relationships via ODM shift.

4. Guidance & Risks:

• FY25 Targets: Electronics to sustain >55% growth; Consumer Durables to align with industry trends (~25% growth).
• Risks: Compressor supply chain monitoring; muted Railway division performance in the near term.

Outlook: Management remains confident in multi-year growth across divisions, driven by capacity expansions, government incentives (electronics), and recovery in railway order execution. Margins expected to improve with scale and operational efficiencies.

Question 1:
"Sir, I had two questions, my first question is on the RAC side. So, now in the past few quarters we did more of assembly because of which our margins were flattish. Now when I see your consolidated gross margin, you further declined by 106 basis points. So, I just want to know if you could throw some light as to how RAC components did versus RAC assembly, and some growth in between those two segments?"
Answer:
Gross margin decline was attributed to product mix variations (e.g., star ratings, tonnage, component revenue share). Both RAC and non-RAC components businesses showed growth, with no significant underlying margin pressure.

Question 2:
"Sir, and my second question is on the Electronics side, and you have revised your guidance upward from 45 to 55%. Now, given in the short term we have capacity constraints for Ascent, also there has been ASP decline in hearables and wearables. So, what is going to be needed so much that we are revising our guidance so much?"
Answer:
Growth is driven by expanded applications (telecom, smart meters, automotive, defense) and Ascent Circuits' capacity ramp-up. New customers and diversification beyond consumer durables (e.g., renewable energy) support the revised 55%+ revenue growth guidance.

Question 3:
"Sir, just wanted to understand the RAC segment a little better. Now if I look at it, for the nine-month period we have grown fairly well, even this quarter we have grown about 71%. Now, if I understand, a lot of the brands were putting up a lot of capacities in a lean season too they have continued to outsourced. So, if you can just explain what's driving this growth, what's the end market growth? And coming into the next season, given the overall slowdown in consumption and the base of last year being very high, how are you looking at the upcoming season really?"
Answer:
Growth stemmed from converting gas-charging customers to ODM partnerships and channel inventory buildup for summer. Industry expects 25% growth in FY25; Amber anticipates matching/exceeding this via new customer additions despite consumption slowdown concerns.

Question 4:
"Sir on Sidwal you spoke about the deferment by Indian Railways which has resulted in a bit of a sluggish nine-month period. Now going ahead, how are you looking at the ramp up coming back? Because this year we will probably see some decline in revenues and drop in margins. But as we move ahead into '26, where do you see the acceleration coming through, what kind of execution can be there? And do margins then revert back to 20% if revenue growth comes back, or should we structurally look at a lower margin profile out here?"
Answer:
Delays (e.g., Vande Bharat Express coach redesign, Mumbai Metro) are temporary. Margins are expected to normalize to 18-22% by H2 FY26 as projects resume and defense exports gain traction.

Question 5:
"Just wanted to understand these new customers that have been moved from gas charging to ODM solutions. How large could those customers be and how much they may have contributed in third quarter and nine-month of this fiscal?"
Answer:
New ODM customers are large multinationals contributing significantly to RAC's 71% growth. Contracts are long-term, with growth driven by design investments and expanded component supply alongside finished goods.

Question 6:
"Sir, the reason why I was asking is that like you mentioned room AC category grew by 71%, just wanted to kind of get some sense how much would have existing customers grown by and how much these new customers could have contributed. How relevant are these customers in the overall scheme of things?"
Answer:
Existing customers grew ~30-35%, while new ODM conversions and commercial AC additions drove incremental growth. New customers are critical for long-term scaling, though exact revenue splits aren't disclosed.

Question 7:
"Sir, currently, the industry capacity, I mean, how do you see the current industry capacity of the brands as well as the EMS players both put together? And how do you see the capacity changing by FY'26 end and by FY'27 end? I guess most of the projects are already in place now, so what should be the capacity change maximum?"
Answer:
Brands have built capacities (0.5"“2 million units) for long-term growth. Amber operates at ~65% utilization. Industry seasonal capacity utilization is ~65%, with flexibility to expand assembly lines as needed.

Question 8:
"Sir, on the proposed JV with Korea Circuit on the manufacturing of PCBs. If you could just help us, what is the overall Capex that you are looking at here? What could be the asset turns? I understand we are expecting quite a bit of subsidy as well here, so yes, some dot contours, by when do you commission this plan?"
Answer:
JV Capex likely ~Rs.1,000 crore, pending finalized incentives (expected post-Budget). Asset turns could hit 2.5"“3x with subsidies. Production targets depend on approvals (likely by H2 FY26).

Question 9:
"Sir, my questions are related to this JV [...] over a longer term, three to four year or a five-year term period, where do we see the scale up which can happen in this particular subsidiary of IL JIN and Korea Circuit?"
Answer:
The JV focuses on HDI, flex, and semiconductor substrates. Exports are expected to scale gradually, with domestic demand driving initial growth. Margins could reach double digits by FY26.

Question 10:
"Sir, if you could give a sense, I know it's kind of a repeated question, but for nine-months what would have been the industry growth in your estimate? [...] you have said about 25% growth for the full year, does that mean that fourth quarter the underlying assumption is actually a lower number?"
Answer:
Industry grew ~30% in 9M FY25. Q4 growth may slow due to high base, but full-year FY25 growth is projected at 25%, with FY30 targets of 3"“3.5 crore units.

Question 11:
"Sir, would it be possible to comment broadly how much price increases are required in your AC business to compensate for the recent commodity increases and currency depreciations?"
Answer:
Refrigerant price hikes (Rs.100"“120/AC) are offset via quarterly price adjustments. Currency/commodity fluctuations are passed through via B2B contracts, minimizing margin impact.

Question 12:
"In the RAC components ex of compressor, what other major components we do not have in our portfolio? And any plan to add if we have any?"
Answer:
Amber covers ~70% of AC components but excludes refrigerants, compressors, copper/aluminum tubes, and wiring harnesses. Expansion into these is under evaluation but not confirmed.