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Review By Dilip Davda on January 10, 2018
Amber Enterprises India Ltd. (AEIL) is a niche player in functional component manufacturing segment that is used widely by Room Air Conditioner (RAC) manufacturers. Company enjoys preference of eight out of 10 mega players in the field and is getting more new customers that are entering in this field as under While Goods penetration among users has vide difference as far as ACs are concerned. While TV, Fridge and Washing Machines enjoys penetration of over 10% to 60% in India, AC penetration is as low as around 4% and thus this segment has vide scope of advancement going forward.RAC penetration in neighboring countries ranges from 30 to 100%. Its customer includes Panasonic, LG, Daikin, Hitachi, Whirlpool, Voltas, Blue Star and Godrej. Company is a market leader in Indian RAC, OEM/ODM segments and has comprehensive product portfolio to suit the requirements of its customers. AEIL has 11 manufacturing facilities at 7 strategic locations and thus enjoys proximity of its prime customers. To stay tuned with the futuristic requirements, it keeps spending on R&D and backward integration. In last five years it made two acquisitions i.e. PICL in 2012 and IL Jin in 2017 and is now able to offer maximum solutions under one roof. It enjoys “Make in India” status and helps India in reducing imports from China and other countries. While increasing temperature will bring more demand, adequacy of power supply help for faster advancement of RAC markets domestically. As per Frost and Sullivan report, RAC and OEM/ODM markets are set to post CAGR of 12.4% and 25.1% respectively by 2022. AEIL enjoys market share of 19.1% in RAC and 55.4% in OEM/ODM segments respectively. AEIL’s customers command around 75% of the Indian RAC market share.
To part finance its debt repayment/prepayment plans and general corpus fund needs, AEIL is coming out with a maiden IPO of around 6984865 equity shares of Rs. 10 each via book building route with a price band of Rs. 855-859 to mobilize Rs. 597.21 cr. – Rs. 600 cr. (based on lower and upper price bands). Issue opens for subscription on 17.01.18 and will close on 19.01.18. It has reserved 50000 shares for eligible employees and offering them a discount of Rs. 85 per share. Minimum application is to be made for 17 shares and in multiples thereon, thereafter. Post allotment, shares will be listed on BSE/NSE. BRLMs to this issue are Edelweiss Financial Services Ltd., IDFC Bank Ltd., SBI Capital Markets Ltd. and BNP Paribas. Karvy Computershare Pvt. Ltd. is the registrar to the issue. Issue constitutes 22.2% of its post issue paid up equity capital. Having issued initial equity since inception till May 2011 at par, it raised further equity in the price range of Rs. 125.66 to Rs. 237.30 between July 2012 and December 2017. It has also issued bonus shares in the ratio of 7 for 1 in July 2011. Average cost of acquisition of shares by the promoters is Rs. 38.73 and Rs. 43.71 per share. Post issue AEIL’s current paid up equity capital of Rs. 25.92 crore will stand enhanced to Rs. 31.45 crore.
On performance front, AEIL has (on a consolidated basis) posted turnover/net profits of Rs. 979.70 cr. / Rs. 22.20 (FY14), Rs. 1236.47 cr. / Rs. 28.77 cr. (FY15), Rs. 1092.11 cr. / Rs. 24.10 cr. (FY16) and Rs. 1652.26 cr. / Rs. 27.90 cr. It suffered a setback for FY16 on account of realigning its business strategy with hiving off of non-core and non-profitable businesses. For H1 of current fiscal, it has reported net profit of Rs. 27.31 crore on a turnover of Rs. 941.55 crore. According to management, although RAC market has no longer a seasonal business, last five years pattern of financial performance indicated 40% revenues for first half and 60% revenues in the second half. Considering this, AEIL is expected to outperform. For last three fiscals it has shown an average EPS of Rs. 12.31 and average RoNW of around 9.24. Asking price is at a P/BV of 5.64 based on its NAV of Rs. 152.30 as on 30.09.17. If we annualize its performance on its financial pattern, asking price is at a P/E of around 40.
On BRLM’s front, 4 BRLMs associated with this offer have handled 35 public issues in past three financial years out of which 9 public issues closed below the issue price on listing date.
Conclusion: Although issue appears fully priced, considering bright prospects for RAC segment, investment in this offer may be considered for short to long term. (Subscribe).
Caption: L to R Mr. Daljit Singh-MD and Mr. Jasbir Singh- Chairman/CEO of Amber Enterprises
Review By Dilip Davda on January 10, 2018
DISCLAIMER: No financial information whatsoever published anywhere here should be construed as an offer to buy or sell securities, or as advice to do so in any way whatsoever. All matter published here is purely for educational and information purposes only and under no circumstances should be used for making investment decisions. Readers must consult a qualified financial advisor before making any actual investment decisions, based on the information published here. My reviews do not cover GMP market and operators game plans. Any reader taking decisions based on any information published here does so entirely at their own risk. Investors should bear in mind that any investment in stock markets is subject to unpredictable market-related risks. The above information is based on RHP and other documents available as of date coupled with market perception. The author has no plans to invest in this offer.
About Dilip Davda
Dilip Davda is veteran journalist associated with stock market since 1978. He is contributing to print and electronic media on stock markets/insurance/finance since 1985.
Dilip Davda is a leading reviewer of public issues and NCDs in the primary stock market in India. The knowledge he gained over 3 decades while working in the stock market and a strong relationship with popular lead managers makes his reviews unique. His detail fundamental and financial analysis of companies coming up with IPO helps investors in the primary stock market. Dilip Davda has a special interest in analyzing the SME companies and writing reviews about their public issues. His reviews are regularly published online and in news papers.
(Dilip Davda -SEBI registered Research Analyst-Mumbai,
Registration no. INH000003127 (Perpetual)
Email id: dilip_davda@rediffmail.com ).
The initial public offer (IPO) of Amber Enterprises India Limited offers an early investment opportunity in Amber Enterprises India Limited. A stock market investor can buy Amber Enterprises IPO shares by applying in IPO before Amber Enterprises India Limited shares get listed at the stock exchanges. An investor could invest in Amber Enterprises IPO for short term listing gain or a long term.
Read the Amber Enterprises IPO recommendations by the leading analyst and leading stock brokers.
Amber Enterprises IPO offers an opportunity to buy IPO shares before they get listed at the stock exchanges. Read the Amber Enterprises IPO Notes, Analysis and Recommendations by leading stock brokerage firms and experts in the above answer.
Our recommendation for Amber Enterprises IPO is to subscribe.
As per the analysis by our lead analyst Mr. Dilip Davda, we suggest you to subscribe to the Amber Enterprises IPO.
The Amber Enterprises IPO allotment status will be available on or around January 24, 2018. The allotted shares will be credited in demat account by January 29, 2018. Visit Amber Enterprises IPO allotment status to check.
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