Amber Enterprises Faces Margin Squeeze: ICICI Securities Maintains HOLD But Slashes Target Price!

ICICI Securities has released a research report on Amber Enterprises India, providing insights into its Q2FY26 performance and future outlook. The company experienced a 2.2% year-on-year revenue decline, primarily due to weaker margins in its Room Air Conditioner (RAC) segment. However, this was partially offset by strong performance in other business verticals and diversification within the consumer durables sector.

The consumer durables segment is projected to grow between 13-15% year-on-year in FY26, a positive sign despite a generally flat industry outlook. Margins in the electronics segment were negatively impacted by rising raw material prices. The report notes that these cost pressures are expected to ease by the fourth quarter of FY26, aided by pass-through clauses in contracts that allow Amber Enterprises to transfer increased costs to customers.

A significant positive is the railways segment, which boasts an order book of approximately INR 26 billion. Amber Enterprises' management is targeting to double the revenue from this segment within the next two years. Furthermore, the company aims to achieve a net cash position by FY26.

Outlook and Impact: ICICI Securities forecasts Amber Enterprises to achieve Compound Annual Growth Rate (CAGR) of 20.3% for revenue and 37.1% for Profit After Tax (PAT) between FY25 and FY28. Despite these growth projections, the firm maintains a 'HOLD' recommendation on the stock. The target price has been revised downwards from INR 7,700 to INR 7,000, implying a target Price-to-Earnings (P/E) ratio of 36 times FY28 earnings. This revision suggests that while the company is expected to grow, the current stock valuation might already reflect a significant portion of its potential upside, hence the cautious 'HOLD' stance.

Difficult Terms: * CAGR (Compound Annual Growth Rate): The average annual growth rate of an investment over a specified period longer than one year. * PAT (Profit After Tax): The net profit of a company after deducting all expenses, including taxes. * RAC Segment: Refers to the Room Air Conditioner segment of the company's business. * Consumer Durables (CD): Household products like refrigerators, washing machines, air conditioners, etc. * Pass-through clauses: Contractual provisions that allow a company to pass on increased costs, such as raw material prices, to its customers. * Orderbook (OB): The total value of unfulfilled orders received by a company. * Net cash position: When a company's cash and cash equivalents exceed its total debt. * DCF (Discounted Cash Flow): A valuation method used to estimate the value of an investment based on its future cash flows. * P/E (Price-to-Earnings) ratio: A valuation multiple that relates a company's stock price to its earnings per share. * FY26/FY28E: Fiscal Year 2026 / Fiscal Year 2028 Estimates.

Impact 6/10