1QFY2020 Result Update | Consumer Durable
August 14, 2019
Amber Enterprises India
BUY
CMP
`820
Performance Update
Target Price
`1,061
(` cr)
1QFY20
1QFY19
% yoy 4QFY19
% qoq
Investment Period
12 months
Revenue
996
602
65
971
3
EBITDA
93
55
70
102
(9)
Stock Info
Sector
Consumer Durable
OPM (%)
9.4
9.1
24bp
10.5
117bp
Market Cap (` cr)
2,570
Reported PAT
49
29
68
62
(21)
Net Debt (` cr)
188
Source: Company, Angel Research
Beta
0.9
For 1QFY2020, Amber Enterprises Ltd (Amber) posted strong set of numbers given
52 Week High / Low
825/507
both on top-line and bottom-line front. Revenue grew by ~65% yoy to `996cr. On
Avg. Daily Volume
1,099
the bottom-line front, Amber reported PAT growth of ~68% on back of strong
Face Value (`)
2
BSE Sensex
37,319
volume growth and improvement in operating performance.
Nifty
11,030
Growth led by AC Components Division: The company’s top-line grew by ~65%
Reuters Code
AMBER.BO
yoy to `996cr on the back of strong volume growth ( mainly due to addition of new
Bloomberg Code
AMBER.IN
customers, Industry Growth & increased demand by exiting customer due to
increase in custom duty hike )
Shareholding Pattern (%)
Promoters
38.8
Strong volume growth boosted the overall profitability: On the bottom-line front,
MF / Banks / Indian
18.1
Amber reported PAT growth of ~68% on back of strong volume growth and
FII / NRIs / OCBs
10.9
improvement in operating performance.
Indian Public/Others
32.2
Outlook and Valuation: We expect Amber Ltd. to report net profit (reported) CAGR
Abs.(%)
3m
1yr
3yr
of ~27% to ~`152cr over FY2019-21E on the back of topline growth of ~20% in
Sensex
(0.40)
(1.80)
31.7
the same period. Considering the Pick-up in Ac demand and in synergies benefits
Amber
9.30
(11.80)
-
from its new acquisitions, we maintain BUY on the stock with a revised target Price
of `1,061.
Key Financials
Y/E March (` cr)
FY2018
FY2019
FY2020E
FY2021E
Net sales
2,128.1
2,752.0
3,433.7
3,988.0
% chg
28.8
29.3
24.8
16.1
Historical share price chart
Adj. Net profit
62.3
93.7
123.2
151.6
1400
% chg
147.4
50.3
31.6
23.1
1200
EBITDA margin (%)
8.6
7.7
8.5
8.6
1000
800
EPS (`)
19.8
29.8
39.2
48.2
600
P/E (x)
41.4
27.5
20.9
17.0
400
P/BV (x)
2.9
2.6
2.4
2.1
200
RoE (%)
0
7.0
9.5
11.3
12.5
RoCE (%)
13.5
12.4
15.1
16.5
EV/Sales (x)
13.5
13.1
9.3
7.7
EV/EBITDA (x)
1.2
1.0
0.8
0.7
Source: Company, Angel Research
Source: Company, Angel Research Note
Amarjeet S Maurya
022-40003600 Ext: 6831
Please refer to important disclosures at the end of this report
1
Amber Enterprises India| 1QFY2020 Result Update
Exhibit 1: 2QFY2019 Performance
Y/E March (` cr)
1QFY20
1QFY19
% yoy
4QFY19
% qoq
FY2019
FY2018
% chg
Net Sales
996
602
65.4
971
2.5
2,188
1,923
13.8
Consumption of RM
846.5
502
68.6
810
4.5
1,832
1,610
13.8
(% of Sales)
85.0
83.4
83.4
40.4
83.7
83.7
Staff Costs
13
11
9.9
11
13.6
40.4
38.9
4.0
(% of Sales)
1.3
1.9
1.1
1.8
2.0
Other Expenses
43
34
29.2
48
(9.7)
127.6
102.8
24.2
(% of Sales)
4.4
5.6
4.9
5.8
5.3
Total Expenditure
902
547
64.9
869
3.9
2,000
1,752
14.2
Operating Profit
93
55
69.7
102
(8.9)
188
171
10.0
OPM
9.4
9.1
10.5
8.6
8.9
Interest
8
3
165.6
5.2
48.5
15
47
(68.3)
Depreciation
15
12
21.0
13
11.1
50
43
14.9
Other Income
5
1
5
9
8
PBT (excl. Ext Items)
76
41
85.1
89
(14.5)
133
89
49.1
Ext (Income)/Expense
PBT (incl. Ext Items)
76
41
85.1
89
(14.5)
133
89
49.1
(% of Sales)
7.6
6.8
9.2
6.1
4.6
Provision for Taxation
28
12
27
40
27
(% of PBT)
36.2
29.8
30.9
30.4
30.5
Reported PAT
49
29
68.3
62
(21.1)
93
62
49.2
PATM
4.9
4.8
6.3
4.2
3.2
Minority Interest After NP
Extra-ordinary Items
Reported PAT
49
29
68
62
(21.1)
93
62
49.2
Source: Company, Angel Research
August 14, 2019
2
Amber Enterprises India| 1QFY2020 Result Update
Outlook and Valuation
We expect Amber Ltd. to report net profit (reported) CAGR of ~27% to ~`152r
over FY2019-21E on the back of topline growth of ~20% in the same period.
Considering the Pick-up in Ac demand and in synergies benefits from its new
acquisitions, we maintain BUY on the stock with a revised target Price of `1,061.
Downside risks to our estimates
Client concentration: Amber’s business is dependent on certain principal customers
and the loss of or a significant reduction in purchases by such customers could
adversely affect its business, financial condition, results of operations and future
prospects
Downward trend in OEM/ODM business: In recent years, RAC brands have
increasingly outsourced the manufacturing of their products to OEM/ODM players
like Amber. However, there can be no assurance that they will continue to do so in
the future.
Changing preferences, advancement in technology: The markets in which
company’s customers compete are characterized by consumers and their rapidly
changing preferences, advancement in technology and other related factors
including lower manufacturing costs. Hence, the company may be affected by any
disruptions in the industry
Company Background
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.
August 14, 2019
3
Amber Enterprises India| 1QFY2020 Result Update
Standalone Profit & Loss Statement
Y/E March (` cr)
FY2017
FY2018
FY2019
FY2020E
FY2021E
Total operating income
1,651.9
2,128.1
2,752.0
3,433.7
3,988.0
% chg
51.7
28.8
29.3
24.8
16.1
Total Expenditure
1,521.3
1,944.5
2,539.1
3,141.3
3,646.3
Raw Material
1,371.2
1,768.8
2,313.2
2,879.1
3,344.0
Personnel
43.7
49.8
58.8
73.3
87.7
Others Expenses
106.5
125.9
167.2
188.9
214.6
EBITDA
130.5
183.5
212.9
292.4
341.8
% chg
14.8
40.6
16.0
37.4
16.9
(% of Net Sales)
7.9
8.6
7.7
8.5
8.6
Depreciation& Amortisation
40.1
49.0
62.3
75.0
79.5
EBIT
90.4
134.5
150.6
217.4
262.3
% chg
9.1
48.8
11.9
44.4
20.7
(% of Net Sales)
5.5
6.3
5.5
6.3
6.6
Interest & other Charges
63.5
53.8
24.6
40.3
42.6
Other Income
8.8
8.7
10.0
10.0
10.0
(% of Sales)
0.5
0.4
0.4
0.3
0.3
Extraordinary Items
-
-
-
-
-
Share in profit of Associates
-
-
-
-
-
Recurring PBT
35.7
89.4
135.9
187.1
229.7
% chg
9.2
150.4
52.0
37.7
22.8
Tax
10.5
27.1
41.2
56.7
69.6
PAT (reported)
25.2
62.3
93.7
123.2
151.6
% chg
4.5
147.4
50.3
31.6
23.1
(% of Net Sales)
1.5
2.9
3.4
3.6
3.8
Basic & Fully Diluted EPS (`)
8.0
19.8
29.8
39.2
48.2
% chg
4.5
147.4
50.3
31.6
23.1
August 14, 2019
4
Amber Enterprises India| 1QFY2020 Result Update
Standalone Balance Sheet
Y/E March (` cr)
FY2017
FY2018
FY2019
FY2020E FY2021E
SOURCES OF FUNDS
Equity Share Capital
23.8
31.4
31.5
31.5
31.5
Reserves& Surplus
311.1
861.3
954.7
1,058.6
1,186.6
Shareholders Funds
334.9
892.8
986.1
1,090.1
1,218.0
Minority Interest
-
-
19.0
19.0
19.0
Total Loans
344.9
105.5
232.8
350.0
370.0
Other Liab & Prov
46.8
64.4
75.5
75.5
75.5
Total Liabilities
726.6
1062.7
1313.4
1585.8
1791.8
APPLICATION OF FUNDS
Net Block
577.5
739.8
843.1
843.1
843.1
Capital Work-in-Progress
3.0
4.0
5.0
6.0
7.0
Investments
-
5.7
-
-
-
Current Assets
650.4
964.0
1,529.0
2,063.6
2,482.8
Inventories
267.7
395.6
560.6
699.5
812.4
Sundry Debtors
310.4
378.6
787.2
982.1
1,140.7
Cash
34.7
133.8
44.7
217.5
333.0
Loans & Advances
37.1
28.3
13.1
16.4
19.0
Other Assets
0.5
27.6
123.4
148.1
177.7
Current liabilities
560.0
665.8
1,058.7
1,320.9
1,534.2
Net Current Assets
90.4
298.2
470.3
742.7
948.7
Other Non Current Asset
58.6
19.1
-
-
-
Total Assets
726.6
1062.7
1313.4
1585.8
1791.8
August 14, 2019
5
Amber Enterprises India| 1QFY2020 Result Update
Standalone Cashflow Statement
Y/E March (`cr)
FY2017
FY2018
FY2019
FY2020E
FY2021E
Profit before tax
38.4
89.4
135.9
187.1
229.7
Depreciation
39.7
49.0
62.3
75.0
79.5
Change in Working Capital
(23.3)
(67.7)
(132.1)
(99.7)
(90.6)
Interest / Dividend (Net)
-
-
-
-
-
Direct taxes paid
(9.0)
(27.1)
(41.2)
(56.7)
(69.6)
Others
(52.7)
(38.8)
(11.2)
(9.4)
(12.8)
Cash Flow from Operations
98.5
82.4
36.1
115.2
161.8
(Inc.)/ Dec. in Fixed Assets
(82.0)
(162.2)
(103.4)
-
-
(Inc.)/ Dec. in Investments
0.8
-
-
-
-
Cash Flow from Investing
(89.7)
(162.2)
(103.4)
-
-
Issue of Equity
50.0
505.3
14.4
-
-
Inc./(Dec.) in loans
46.4
(239.4)
127.3
117.2
20.0
Others
97.6
63.6
162.3
59.5
66.3
Cash Flow from Financing
(1.2)
202.3
(20.6)
57.6
(46.3)
Inc./(Dec.) in Cash
7.6
122.5
(87.9)
172.9
115.5
Opening Cash balances
2.4
10.0
132.5
44.7
217.5
Closing Cash balances
10.0
132.5
44.7
217.5
333.0
August 14, 2019
6
Amber Enterprises India| 1QFY2020 Result Update
Exhibit 2:
Y/E March
FY17
FY18
FY19
FY20E FY21E
Valuation Ratio (x)
P/E (on FDEPS)
102.4
41.4
27.5
20.9
17.0
P/CEPS
21.6
10.5
7.2
5.6
4.6
P/BV
7.7
2.9
2.6
2.4
2.1
Dividend yield (%)
-
-
-
EV/Sales
1.7
1.2
1.0
0.8
0.7
EV/EBITDA
21.9
13.5
13.1
9.3
7.7
EV / Total Assets
3.9
2.3
2.1
1.8
1.6
Per Share Data (`)
EPS (Basic)
8.0
19.8
29.8
39.2
48.2
EPS (fully diluted)
8.0
19.8
29.8
39.2
48.2
Cash EPS
37.9
77.9
113.5
147.1
176.9
Book Value
106.5
283.9
313.6
346.6
387.3
Returns (%)
ROCE
13.3
13.5
12.4
15.1
16.5
Angel ROIC (Pre-tax)
13.9
15.9
11.9
16.5
19.4
ROE
7.5
7.0
9.5
11.3
12.5
Turnover ratios (x)
Asset Turnover (Gross Block)
2.9
3.8
4.2
5.2
6.0
Inventory / Sales (days)
59
68
74
74
74
Receivables (days)
69
65
104
104
104
Payables (days)
99
98
140
140
140
Working capital cycle (ex-cash) (days)
29
35
38
38
38
Source: Company, Angel Research
August 14, 2019
7
Amber Enterprises India| 1QFY2020 Result Update
Research Team Tel: 022 - 39357800
DISCLAIMER
Angel Broking Limited (hereinafter referred to as “Angel”) is a registered Member of National Stock Exchange of India Limited, Bombay
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number INH000000164. Angel or its associates has not been debarred/ suspended by SEBI or any other regulatory authority for
accessing /dealing in securities Market. Angel or its associates/analyst has not received any compensation / managed or co-managed
public offering of securities of the company covered by Analyst during the past twelve months.
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decision. Nothing in this document should be construed as investment or financial advice. Each recipient of this document should
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Disclosure of Interest Statement
Amber Enterprises India
1. Financial interest of research analyst or Angel or his Associate or his relative
No
2. Ownership of 1% or more of the stock by research analyst or Angel or associates or relatives
No
3. Served as an officer, director or employee of the company covered under Research
No
4. Broking relationship with company covered under Research
No
Ratings (Returns):
Buy (> 15%)
Accumulate (5% to 15%)
Neutral (-5 to 5%)
Reduce (-5% to -15%)
Sell (< -15%)
August 14, 2019
8
