Amber Enterprises India Ltd, a market leader in the heating, ventilation, and air conditioning (HVAC) industry in India, is drawing positive forecasts from analysts despite the company posting losses. Earlier this week, Amber Enterprises announced that its net loss during the quarter ended September 2023 (Q2 FY24) widened to ₹5.6 crore compared with a loss of ₹2.2 crore in the year-ago period. Despite that, most brokerages have turned bullish on the stock for various reasons.
After the Q2 FY24 results, global brokerage firm Jefferies has given a ‘buy’ call on Amber Enterprises while raising the target price to ₹3,990 per share. This translates into a massive upside potential of over 43% from the stock’s previous close of ₹2,785.75 on Monday on the BSE.
Jefferies said that Amber’s losses expanded in the second quarter of the current financial year due to higher interest and depreciation. The brokerage has cut the company’s FY24/25 earnings per share (EPS) estimates by 5%/2%. Jefferies added that Amber’s capital expenditure should normalise from FY25, supporting the expansion in the RoCE (return on capital employed).
Jefferies also noted that Amber Enterprises sees its sales in the electronics and mobility divisions growing two times over the next two years.
#CNBCTV18Market | Jefferies raises target for Amber Ent to 3,990. Co sees sales in electronics & mobility to grow 2x over next 2 yrs pic.twitter.com/yNN7Y85g9s
— CNBC-TV18 (@CNBCTV18Live) October 25, 2023
Global investment firm Goldman Sachs also gave a ‘buy’ call on Amber Enterprises. However, the stock price forecast was relatively muted at ₹2,990 per share.
Goldman Sachs said that the company is scaling up subsidiaries and components to improve its profitability. It noted that Amber’s strategic shift towards components continued this quarter with improved margins.
Amber Enterprises will be a key beneficiary of the secular growth story of air conditioners in India, Goldman Sachs said in its note.
#CNBCTV18Market | GS expects scaling up subsidiaries and components to improve profitability for Amber Ent pic.twitter.com/cDip46vK0U
— CNBC-TV18 (@CNBCTV18Live) October 25, 2023
Financial services firm CLSA was also bullish on Amber Enterprises. It issued a ‘buy’ rating with a target price of ₹3,650 per share (hinting at a 31% upside from the current levels).
CLSA said Q2 margins were tepid, but the outlook looked strong. The medium-term growth guidance for non-RAC (residential air conditioning) segments remained robust, it added.
#CNBCTV18Market | CLSA maintains Buy call on Amber Ent, believes ability to ramp-up would be key for re-rating pic.twitter.com/AFuA3oV2Fz
— CNBC-TV18 (@CNBCTV18Live) October 25, 2023
Reacting to the positive commentary, the Amber Enterprises India stock gained over 6% on Wednesday to hit an intra-day high of ₹2,962.40 on BSE. The stock was trading around ₹2,000 levels a year ago and has already risen over 42%. With price targets as high as ₹4,000 levels being predicted, it would be interesting to see how the stock price moves from here on.
(Edited by : Ajay Vaishnav)
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