Amber Enterprises India Limited

Started in 1990, Amber Enterprises India Limited is a market leader in the RAC OEM/ODM industry in India with a market share of 55.4% in terms of volume in Fiscal 2017. They are a one-stop solutions provider for the major brands in the RAC industry and currently serve eight out of the top 10 RAC brands in India. AEIL has a diversified product portfolio as set out below:1. RACs: They design and manufacture complete RACs including window air conditioners ('WACs') and indoor units('IDUs') and outdoor units ('ODUs') of split air conditioners ('SACs') with specifications ranging from 0.75 ton to 2 ton, across energy ratings and types of refrigerant. They also design and manufacture Inverter RACs on ranging from 1 ton to 2 ton.2. RAC Components: They manufacture critical and reliability functional components of RACs such as heat exchangers, motors and multi-flow condensers. They manufacture other RAC components such as sheet metal components, copper tubing and injection molding components.3. Other Components: They manufacture components for other consumer durables and automobiles such as case liners for refrigerator, plastic extrusion sheets for consumer durables and automobile industry, sheet metal components for microwave, washing machine tub assemblies and for automobiles and metal ceiling industries. Their key customers include leading RAC brands such as Daikin, Hitachi, LG, Panasonic, Voltas and Whirlpool. Their customers command around 75% share in the Indian RAC market in Fiscal 2017. They have 10 manufacturing facilities spread across seven locations in India. They have a dedicated R&D centre located at our Rajpura facility which is equipped with a psychometric lab. On financial performance front, AEIL has posted turnover/net profits of Rs. 882.34 cr. / Rs. 19.7 cr. (FY13), Rs. 979.7 cr. / Rs. 22.2 cr. (FY14), Rs. 1236.47 cr. / Rs. 28.77 cr. (FY15), Rs. 1092.12 cr. / Rs. 24.10 cr. (FY16) and Rs. 1652.26 cr. / Rs. 27.9 cr. (FY17). For H1 of FY18, it has reported net profit of Rs. 27.31 cr. on a turnover of Rs. 941.55 cr. Thus company has posted healthy growth over last couple of years on consistent basis except FY16 where company had realigned its business strategy and closed certain less profitable businesses. AEIL has posted an average EPS of Rs. 12.31 and average RoNW of 9.24% for last three fiscals. Issue is priced at a P/BV of 5.64 based on NAV of 152.30 as on 30.09.2017. As RHP, there is no peers with which we can compare AEIL. If we attribute latest earnings on fully diluted equity post issue, then asking price is at a P/E of around 40, which looks fully priced. 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. As per financials, company's growth is very good, RoNW is 9.24% for last three fiscals and issue is priced at P/E of around 40 as per latest earnings. Company is working in RAC business with commanding position and bright prospect of this industry, so AEIL may out perform in upcoming years. Thus, we give SUBSCRIBE rating to this IPO with short to long term view.

• 1 Mr. Jasbir Singh
• 2 Mr. Daljir Singh