2QFY2019 Result Update | Consumer Durable
November 2, 2018
Amber Enterprises India Ltd
BUY
CMP
`856
Performance Update
Target Price
`1135
Y/E March (` cr)
Q2FY18
Q2FY19
% yoy
Q1FY18
% qoq
Investment Period
12 Months
Net sales
265.0
226.3
-14.6%
602.1
-62%
EBITDA
22.0
8.9
-59.6%
55.0
-84%
Stock Info
EBITDA margin (%)
8.3%
3.9%
9.1%
Sector
Consumer Durable
Adjusted PAT
2.3
-1.7
-173.9%
28.9
-106%
Market Cap (` cr)
2,691
For Q2FY2019, Amber Enterprises (Amber) posted a 15% yoy fall in sales
Beta
0.9
volumes owing to unseasonal rains in April & May which resulted in inventory
52 Week High / Low
1327/883
build up across brands. The company is expecting a recovery in demand in H2
Avg. Daily Volume
12,522
and has maintained the guidance of 2.1 mn volume sales in FY2019, a 10% yoy
Face Value (`)
2
growth.
BSE Sensex
34,432
Fall in revenue: Its Q2’s standalone top-line fell by 15% yoy led by fall in ACs
Nifty
10,380
volume. Its subsidiaries/recent acquisitions namely - Ever Electronics, IL JIN and
Reuters Code
AMBE.BO
PICL reported a total sales of `175cr with an OPM of ~4%+ up from previous
Bloomberg Code
AMBER.IN
level of ~3.5%. Amber is expecting lot of synergies from its recent acquisitions in
near future which would drive future growth.
Shareholding Pattern (%)
Margins were under pressure:. Q2 is a low base quarter, hence fall in revenue
Promoters
44
drove down the company’s profitability. The company has guided for margin
MF / Banks / Indian Fls
33
improvement in H2 on the back of improving product mix towards high-margin
FII / NRIs / OCBs
11
components segment. Low volume turned into a loss of `1.7 cr for the quarter.
Indian Public / Others
12
Outlook and Valuation: We have largely maintained our earnings estimates in
view of expected recovery in AC demand in subsequent quarters and synergies
Abs.(%)
3m 1yr 3yr
benefits from its new acquisitions. We expect Amber to report a CAGR of
Sensex
(8.2)
(2.1)
29.6
~27%/50% in consolidated revenue/earnings over FY18-20E. The recent
Amber
(15.4)
(24.6)
correction provides a good entry point for long term investors. We maintain BUY
with a target price of `1135 (25x FY2020E EPS).
3-year price chart
Key Consolidated Financials
Y/E March (` cr)
FY2016
FY2017
FY2018
FY2019E FY2020E
Net Sales
1,089.0
1,651.9
2,128.1
2,914.0
3,438.6
% chg
-11.5
51.7
28.8
36.9
18.0
Net Profit
24.1
25.2
62.3
110.8
140.2
% chg
-13.5
4.5
147.4
77.8
26.6
EBITDA (%)
10.4
7.9
8.6
7.5
7.5
EPS (`)
7.7
8.0
19.8
35.2
44.6
Source: Capital line
P/E (x)
111.7
106.9
43.2
24.3
19.2
P/BV (x)
10.2
8.0
3.0
2.7
2.4
Nidhi Agrawal
RoE (%)
9.2
7.5
7.0
11.2
12.7
+022 39357600
RoCE (%)
14.1
13.3
13.5
15.4
16.9
EV/EBITDA
26.1
22.7
14.1
11.4
9.5
EV/Sales
2.7
1.8
1.2
0.9
0.7
Source: Company, Angel Research
Please refer to important disclosures at the end of this report
1
Amber Enterprises |2QFY2019 Result Update
Exhibit 1: Q2FY2019 Performance
` cr
Q2FY18
Q1FY19
Q2FY19
YOY %
QoQ% H1FY19
H1FY18
YOY %
Net Sales
265.0
602.1
226.3
-14.6%
-62%
828.4
889.1
-7%
Other Expenses
6%
6%
9%
46.0%
65%
15%
11%
39%
Operating profit
22.0
55.0
8.9
-59.6%
-84%
63.9
78.4
-19%
Other Income
1.8
1.1
2.8
57.6%
162%
3.8
3.8
-1%
Interest
10.2
2.9
3.3
-68.0%
14%
6.2
22.8
-73%
PBDT
13.5
53.1
8.4
-37.9%
-84%
61.5
59.4
4%
Depreciation
10.5
12.0
12.3
17.5%
3%
24.3
20.9
16%
PBT
3.0
41.1
-3.9
-230.2%
-110%
37.2
38.5
-3%
Total tax
0.7
12.3
-2.2
-427.1%
-118%
10.1
10.5
-4%
PAT
2.35
28.9
-1.74
-173.9%
-106%
27.1
28.0
-3%
Ratios
OPM %
8.3%
9.1%
3.9%
7.7%
8.8%
Tax rate
22.2%
29.8%
55.9%
27.1%
27.4%
PAT margin %
0.9%
4.8%
-0.8%
3.3%
3.1%
Source: Company, Angel Research
Valuation
The stock is currently trading at 19.2 its FY2020 consolidated earnings, which
looks attractive looking at its growing manufacturing capabilities and scale which
put it in a sweet spot to capture the underpenetrated RAC market in India. We
maintain BUY with a target price of `1135 (25x FY2020E EPS).
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.
November 2, 2018
2
Amber Enterprises |2QFY2019 Result Update
Consolidated Profit & Loss Statement
Y/E March (` cr)
FY2016
FY2017
FY2018
FY2019E FY2020E
Total operating income
1,089.0
1,651.9
2,128.1
2,914.0
3,438.6
% chg
-11.5
51.7
28.8
36.9
18.0
Total Expenditure
975.3
1,521.3
1,944.5
2,695.5
3,180.7
Raw Material
858.5
1,371.2
1,768.8
2,476.9
2,922.8
Personnel
36.5
43.7
49.8
58.3
68.8
Others Expenses
80.3
106.5
125.9
160.3
189.1
EBITDA
113.7
130.5
183.5
218.6
257.9
% chg
10.9
14.8
40.6
19.1
18.0
(% of Net Sales)
10.4
7.9
8.6
7.5
7.5
Depreciation& Amortisation
30.9
40.1
49.0
51.2
54.3
EBIT
82.9
90.4
134.5
167.3
203.6
% chg
7.6
9.1
48.8
24.4
21.7
(% of Net Sales)
7.6
5.5
6.3
5.7
5.9
Interest & other Charges
53.2
63.5
53.8
18.8
15.0
Other Income
3.1
8.8
8.7
10.5
12.6
(% of Sales)
0.3
0.5
0.4
0.4
0.4
Recurring PBT
32.7
35.7
89.4
158.9
201.2
% chg
-19.0
9.2
150.4
77.8
26.6
Tax
8.6
10.5
27.1
48.2
61.0
PAT (reported)
24.1
25.2
62.3
110.8
140.2
% chg
-13.5
4.5
147.4
77.8
26.6
(% of Net Sales)
2.2
1.5
2.9
3.8
4.1
Basic & Fully Diluted EPS (Rs)
7.7
8.0
19.8
35.2
44.6
% chg
-13.5
4.5
147.4
77.8
26.6
November 2, 2018
3
Amber Enterprises |2QFY2019 Result Update
Consolidated Balance Sheet
Y/E March (` cr)
FY2016
FY2017
FY2018
FY2019E FY2020E
SOURCES OF FUNDS
Equity Share Capital
21.7
23.8
31.4
31.4
31.4
Reserves& Surplus
240.9
311.1
861.3
954.7
1,073.0
Shareholders’ Funds
262.6
334.9
892.8
986.2
1,104.4
Minority Interest
-
-
-
-
-
Total Loans
326.6
344.9
105.5
100.0
100.0
Other Liab & Prov
80.8
46.8
64.4
88.2
104.1
Total Liabilities
670.0
726.6
1,062.7
1176.3
1310.8
APPLICATION OF FUNDS
Net Block
536.1
577.5
739.8
789.8
839.8
Capital Work-in-Progress
2.0
3.0
4.0
5.0
6.0
Investments
-
-
5.7
55.7
105.7
Current Assets
533.6
650.4
964.0
1,222.2
1,419.2
Inventories
225.8
267.7
395.6
479.0
565.2
Sundry Debtors
247.9
310.4
378.6
479.0
565.2
Cash
18.4
34.7
133.8
172.7
180.2
Loans & Advances
40.6
37.1
28.3
58.3
68.8
Other Assets
1.0
0.5
27.6
33.1
39.8
Current liabilities
445.0
560.0
665.8
911.7
1,075.9
Net Current Assets
88.6
90.4
298.2
310.5
343.4
Other Non Current Asset
45.3
58.6
19.1
20.4
22.0
Total Assets
670.0
726.6
1062.7
1176.3
1310.8
November 2, 2018
4
Amber Enterprises |2QFY2019 Result Update
Consolidated Cash Flow Statement
Y/E March (`cr)
FY2016
FY2017
FY2018
FY2019E FY2020E
Profit before tax
32.7
38.4
89.4
158.9
201.2
Depreciation
30.9
39.7
49.0
51.2
54.3
Change in Working Capital
42.9
(23.3)
(67.7)
(35.6)
(84.3)
Interest / Dividend (Net)
-
-
-
-
-
Direct taxes paid
(10.5)
(9.0)
(27.1)
(48.2)
(61.0)
Others
(56.2)
(52.7)
(38.8)
(5.4)
15.8
Cash Flow from Operations
152.2
98.5
82.4
131.9
94.4
(Inc.)/ Dec. in Fixed Assets
(101.2)
(82.0)
(162.2)
(50.0)
(50.0)
(Inc.)/ Dec. in Investments
1.4
0.8
-
-
-
Cash Flow from Investing
(83.9)
(89.7)
(162.2)
(50.0)
(50.0)
Issue of Equity
-
50.0
505.3
-
-
Inc./(Dec.) in loans
150.6
46.4
(239.4)
(5.5)
-
Others
218.5
97.6
63.6
36.2
36.9
Cash Flow from Financing
(67.9)
(1.2)
202.3
(41.7)
(36.9)
Inc./(Dec.) in Cash
0.4
7.6
122.5
40.2
7.4
Opening Cash balances
2.0
2.4
10.0
132.5
172.7
Closing Cash balances
2.4
10.0
132.5
172.7
180.2
November 2, 2018
5
Amber Enterprises |2QFY2019 Result Update
Key Ratios - Consolidated
Y/E March
FY16
FY17
FY18E FY19E
FY20E
Valuation Ratio (x)
P/E (on FDEPS)
111.7
106.9
43.2
24.3
19.2
P/CEPS
25.2
22.6
11.0
6.7
5.4
P/BV
10.2
8.0
3.0
2.7
2.4
Dividend yield (%)
-
-
-
-
EV/Sales
2.7
1.8
1.2
0.9
0.7
EV/EBITDA
26.1
22.7
14.1
11.4
9.5
EV / Total Assets
4.4
4.1
2.4
2.1
1.9
Per Share Data (`)
EPS (Basic)
7.7
8.0
19.8
35.2
44.6
EPS (fully diluted)
7.7
8.0
19.8
35.2
44.6
Cash EPS
33.9
37.9
77.9
127.1
157.5
Book Value
83.5
106.5
283.9
313.6
351.2
Returns (%)
ROCE
14.1
13.3
13.5
15.4
16.9
Angel ROIC (Pre-tax)
13.7
13.9
15.9
19.2
21.5
ROE
9.2
7.5
7.0
11.2
12.7
Turnover ratios (x)
Asset Turnover (Gross Block)
2.3
2.9
3.8
4.8
5.2
Inventory / Sales (days)
76
59
68
60
60
Receivables (days)
83
69
65
60
60
Payables (days)
95
99
98
98
98
Working capital cycle (ex-cash) (days)
64
29
35
22
22
Source: Company, Angel Research
November 2, 2018
6
Amber Enterprises |2QFY2019 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
Stock Exchange Limited, Metropolitan Stock Exchange Limited, Multi Commodity Exchange of India Ltd and National Commodity &
Derivatives Exchange Ltd It is also registered as a Depository Participant with CDSL and Portfolio Manager and Investment Adviser with
SEBI. It also has registration with AMFI as a Mutual Fund Distributor. Angel Broking Limited is a registered entity with SEBI for Research
Analyst in terms of SEBI (Research Analyst) Regulations, 2014 vide registration 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.
This document is solely for the personal information of the recipient, and must not be singularly used as the basis of any investment
decision. Nothing in this document should be construed as investment or financial advice. Each recipient of this document should make
such investigations as they deem necessary to arrive at an independent evaluation of an investment in the securities of the companies
referred to in this document (including the merits and risks involved), and should consult their own advisors to determine the merits and
risks of such an investment.
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trading volume, as opposed to focusing on a company's fundamentals and, as such, may not match with a report on a company's
fundamentals. Investors are advised to refer the Fundamental and Technical Research Reports available on our website to evaluate the
contrary view, if any
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Disclosure of Interest Statement
Amber Enterprises
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
No
relatives
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 (Based on Expected Returns:
Buy (> 15%)
Accumulate (5% to 15%)
Neutral (-5 to 5%)
over 12 months investment period)
Reduce (-5% to -15%)
Sell (< -15%)
November 2, 2018
7
