1QFY2019 Result Update | Consumer Durable
August 8, 2018
Amber Enterprises India Ltd
BUY
CMP
`939
Performance Update
Target Price
`1135
Y/E March (` cr)
Q1FY18
Q1FY19
% yoy
Q4FY18
% qoq
Investment Period
12 Months
Net sales
624.1
602.1
-3.5%
692.0
-13.0%
EBITDA
56.4
55.0
-2.5%
67.9
-19.0%
Stock Info
EBITDA margin (%)
9.0%
9.1%
9.8%
Sector
Consumer Durable
Adjusted PAT
25.6
28.9
12.7%
33.8
-14.6%
Market Cap (` cr)
2,953
For Q1FY2019, Amber Enterprises (Amber) posted a 9% yoy fall in AC 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 liquidation of inventory in Q2
Avg. Daily Volume
21,741
and added few new clients during the quarter.
Face Value (`)
2
Fall in revenue: Its Q1’s standalone top-line fell by 3.5% yoy led by 3.7% decline
BSE Sensex
37,887
in its sales volume. Its AC Components & Non AC Components grew by 8% &
Nifty
11,455
31% respectively on yearly basis. Its subsidiaries/recent acquisitions namely - Ever
Reuters Code
AMBE.BO
Electronics, IL JIN and PICL reported a total sales of `176 cr with an OPM of 3.2-
Bloomberg Code
AMBER.IN
3.7%. Amber is expecting lot of synergies from its recent acquisitions in near
future and a 10-12% growth in yearly volume.
Shareholding Pattern (%)
Margins were decent: On the operating front, the company’s margin improved to
Promoters
44.0
9.1% due to better product mix. The company has guided for further margin
MF / Banks / Indian Fls
33.0
improvement on the back of improving product mix towards high-margin
FII / NRIs / OCBs
10.8
components segment. It has incurred foreign exchange loss (on import content) of
Indian Public / Others
12.2
`5.7cr vs. gain of `1.2cr in Q1FY18. Adjusting for its, EBITDA is up 7.5% yoy.
Outlook and Valuation: We have maintained our earnings estimates in view of
Abs.(%)
3m 1yr 3yr
expected recovery in AC demand in subsequent quarters and synergies benefits
Sensex
7.0
16.7
33.4
from its new acquisitions. We expect Amber to report a CAGR of ~28%/51% in
Amber
(18.0)
consolidated revenue/earnings over FY18-20E. 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
2,957.5
3,489.8
% chg
-11.5
51.7
28.8
39.0
18.0
Net Profit
24.1
25.2
62.3
113.0
142.9
% chg
-13.5
4.5
147.4
81.4
26.4
EBITDA (%)
10.4
7.9
8.6
7.5
7.5
EPS (Rs)
7.7
8.0
19.8
35.9
45.4
P/E (x)
122.5
117.3
47.4
26.1
20.7
P/BV (x)
11.2
8.8
3.3
3.0
2.7
Source: Company, Angel Research
RoE (%)
9.2
7.5
7.0
11.4
12.9
RoCE (%)
14.1
13.3
13.5
15.7
17.2
Nidhi Agrawal
EV/EBITDA
28.4
24.7
15.5
12.4
10.3
+022 39357600
EV/Sales
3.0
2.0
1.3
0.9
0.8
Source: Company, Angel Research
Please refer to important disclosures at the end of this report
1
Amber Enterprises |1QFY2019 Result Update
Exhibit 1: Q1FY2019 Performance
` cr
Q1FY18
Q1FY19
YoY%
Q4FY18
QoQ%
Net Sales
624.1
602.1
-3.5%
692.0
-13.0%
Total Income
624.1
602.1
-3.5%
692.0
-13.1%
Total Expenditure
567.7
547.1
-3.6%
624.1
-12.3%
Raw Material Consumed
494.5
499.7
1.1%
568.1
-12.0%
Stock Adjustment
36.6
2.4
-93.4%
7.8
-69.2%
COGS
531.1
502.1
-5.5%
575.9
-12.8%
Gross margin %
14.9%
16.6%
11.4%
16.8%
-1.0%
Employee Expenses
9.4
11.5
21.9%
12.7
-9.8%
Other Expenses
27.2
33.5
23.3%
35.5
-5.5%
As a % of revenue
Raw Material Consumed
79%
83%
4.7%
82%
1.1%
Stock Adjustment
6%
0%
-93.2%
1%
-64.6%
COGS
85%
83%
-2.0%
83%
0.2%
Employee Expenses
2%
2%
26.4%
2%
3.6%
Other Expenses
4%
6%
27.8%
5%
8.7%
PBIDT
56.4
55.0
-2.5%
67.9
-19.0%
Other Income
2.1
1.1
-49.4%
0.8
31.9%
Interest
12.6
2.9
-77.1%
7.2
-60.0%
PBDT
45.9
53.1
15.8%
61.5
-13.6%
Depreciation
10.4
12.0
15.4%
11.3
6.1%
PBT
35.5
41.1
16.0%
50.2
-18.0%
Total tax
9.9
12.3
24.5%
16.4
-25.0%
PAT
25.6
28.9
12.7%
33.8
-14.6%
Ratios
OPM %
9.0%
9.1%
9.8%
Tax rate
27.8%
29.8%
32.6%
PAT margin %
4.1%
4.8%
4.9%
Source: Company, Angel Research
August 8, 2018
2
Amber Enterprises |1QFY2019 Result Update
Outlook and Valuation
We have maintained our earnings estimates in view of expected recovery in AC
demand in subsequent quarters and synergies benefits from its new acquisitions.
We expect Amber to report a CAGR of
~28%/51% in consolidated
revenue/earnings over FY18-20E.
Valuation
The stock is currently trading at 20.7x 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.
August 8, 2018
3
Amber Enterprises |1QFY2019 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
2,957.5
3,489.8
% chg
-11.5
51.7
28.8
39.0
18.0
Total Expenditure
975.3
1,521.3
1,944.5
2,735.7
3,228.1
Raw Material
858.5
1,371.2
1,768.8
2,513.9
2,966.4
Personnel
36.5
43.7
49.8
59.1
69.8
Others Expenses
80.3
106.5
125.9
162.7
191.9
EBITDA
113.7
130.5
183.5
221.8
261.7
% chg
10.9
14.8
40.6
20.9
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
170.6
207.5
% chg
7.6
9.1
48.8
26.8
21.6
(% of Net Sales)
7.6
5.5
6.3
5.8
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
Extraordinary Items
-
-
-
-
-
Share in profit of Associates
-
-
-
-
-
Recurring PBT
32.7
35.7
89.4
162.2
205.0
% chg
-19.0
9.2
150.4
81.4
26.4
Tax
8.6
10.5
27.1
49.2
62.1
PAT (reported)
24.1
25.2
62.3
113.0
142.9
% chg
-13.5
4.5
147.4
81.4
26.4
(% of Net Sales)
2.2
1.5
2.9
3.8
4.1
Basic & Fully Diluted EPS (Rs)
7.7
8.0
19.8
35.9
45.4
% chg
-13.5
4.5
147.4
81.4
26.4
August 8, 2018
4
Amber Enterprises |1QFY2019 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
956.7
1,077.2
Shareholders Funds
262.6
334.9
892.8
988.1
1,108.6
Minority Interest
-
-
-
-
-
Total Loans
326.6
344.9
105.5
100.0
100.0
Other Liab & Prov
80.8
46.8
64.4
89.5
105.7
Total Liabilities
670.0
726.6
1,062.7
1,177.7
1,314.3
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
1,237.0
1,438.6
Inventories
225.8
267.7
395.6
486.2
573.7
Sundry Debtors
247.9
310.4
378.6
486.2
573.7
Cash
18.4
34.7
133.8
172.4
181.6
Loans & Advances
40.6
37.1
28.3
59.1
69.8
Other Assets
1.0
0.5
27.6
33.1
39.8
Current liabilities
445.0
560.0
665.8
925.3
1,091.9
Net Current Assets
88.6
90.4
298.2
311.7
346.7
Other Non Current Asset
45.3
58.6
19.1
20.5
22.2
Total Assets
670.0
726.6
1062.7
1177.6
1314.3
August 8, 2018
5
Amber Enterprises |1QFY2019 Result Update
Consolidated Cash Flow Statement
Y/E March (`cr)
FY2016
FY2017
FY2018
FY2019E FY2020E
Profit before tax
32.7
38.4
89.4
162.2
205.0
Depreciation
30.9
39.7
49.0
51.2
54.3
Change in Working Capital
42.9
(23.3)
(67.7)
(37.8)
(84.7)
Interest / Dividend (Net)
-
-
-
-
-
Direct taxes paid
(10.5)
(9.0)
(27.1)
(49.2)
(62.1)
Others
(56.2)
(52.7)
(38.8)
(5.4)
15.8
Cash Flow from Operations
152.2
98.5
82.4
131.9
96.6
(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
36.5
37.4
Cash Flow from Financing
(67.9)
(1.2)
202.3
(42.0)
(37.4)
Inc./(Dec.) in Cash
0.4
7.6
122.5
39.8
9.3
Opening Cash balances
2.0
2.4
10.0
132.5
172.4
Closing Cash balances
2.4
10.0
132.5
172.4
181.6
August 8, 2018
6
Amber Enterprises |1QFY2019 Result Update
Key Ratios - Consolidated
Y/E March
FY16
FY17
FY18E FY19E
FY20E
Valuation Ratio (x)
P/E (on FDEPS)
122.5
117.3
47.4
26.1
20.7
P/CEPS
27.7
24.8
12.1
7.3
5.9
P/BV
11.2
8.8
3.3
3.0
2.7
Dividend yield (%)
-
-
-
-
EV/Sales
3.0
2.0
1.3
0.9
0.8
EV/EBITDA
28.4
24.7
15.5
12.4
10.3
EV / Total Assets
4.8
4.4
2.7
2.3
2.1
Per Share Data (`)
EPS (Basic)
7.7
8.0
19.8
35.9
45.4
EPS (fully diluted)
7.7
8.0
19.8
35.9
45.4
Cash EPS
33.9
37.9
77.9
129.3
160.1
Book Value
83.5
106.5
283.9
314.2
352.5
Returns (%)
ROCE
14.1
13.3
13.5
15.7
17.2
Angel ROIC (Pre-tax)
13.7
13.9
15.9
19.5
21.8
ROE
9.2
7.5
7.0
11.4
12.9
Turnover ratios (x)
Asset Turnover (Gross Block)
2.3
2.9
3.8
4.8
5.3
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
August 8, 2018
7
Amber Enterprises |1QFY2019 Result Update
Research Team Tel: 022 - 39357800
DISCLAIMER:
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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 make
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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%)
August 8, 2018
8
