Amber Enterprises Faces RAC Slump: Can Electronics & Railways Fuel a Q4 Comeback? Find Out!

Amber Enterprises reported an 18 percent year-on-year revenue decline in its Consumer Durables division, comprising Room Air Conditioners (RAC), for Q2 FY26. This weakness stemmed from a challenging RAC industry that contracted by 30-35 percent and purchase deferrals related to GST rate adjustments. Despite this, the company projects 13-15 percent growth for the division in FY26, leveraging product diversification and deeper customer relationships. Operating margins saw a modest contraction, but Amber is actively shifting its business mix towards higher-margin component categories.

The Electronics division, however, demonstrated robust performance with a 30 percent YoY revenue growth. This was bolstered by acquisitions like Ascent Circuits, enhancing PCB manufacturing capabilities, and a strategic partnership with Korea Circuit for advanced PCBs targeting high-growth sectors like IT and semiconductors. Significant capex of Rs 650 crore is allocated for a new multi-layer PCB facility. Diversification into sectors like smart meters, defence, and automotive is being driven by strategic investments in companies such as Power-One (solar inverters) and Unitronics (industrial automation).

The Railway Sub-systems & Mobility segment also posted a 6 percent YoY revenue increase, supported by metro projects and ongoing alliances. With a substantial order book, the company aims to double the revenue from this segment within two years.

**Impact**: Amber's short-term outlook faces pressure from muted RAC demand and margin headwinds, with recovery anticipated from Q4 FY26. The long-term growth trajectory appears strong due to diversification into high-value electronics and the booming railway sector. Investors will closely watch margin recovery and sustained demand revival. The stock currently trades at 38 times its FY28 estimated earnings, indicating high expectations. Rating: 7/10.

**Terms**: * **RAC (Room Air Conditioner)**: A system used to cool and dehumidify the air in a room. * **YoY (Year-on-Year)**: A comparison of financial data over consecutive years. * **GST (Goods and Services Tax)**: An indirect tax levied on the supply of goods and services in India. * **PCB (Printed Circuit Board)**: A board used in electronic devices to connect components. * **ECMS (Electronic Component Manufacturing Scheme)**: A government initiative to promote local manufacturing of electronic components. * **PLI (Production Linked Incentive)**: Government incentives to encourage domestic production. * **Capex (Capital Expenditure)**: Funds invested by a company to acquire or upgrade physical assets. * **EBITDA**: Earnings Before Interest, Taxes, Depreciation, and Amortization, a measure of operating profitability. * **ROCE (Return on Capital Employed)**: A profitability ratio measuring how well a company generates profits from its capital.