November 11, 2019 RESULT UPDATE - Q2FY20

Amber Enterprises (India) Ltd. (AEIL)

Sensex: 40324 CMP: INR 970 Target Price: INR 1170

Air Conditioner

On a consolidated basis, Revenue rose 89% YoY to INR 6,232mn with revenue from subsidiaries (including recent acquisitions)
contributing INR 2,298mn (up 122%). Consolidated EBITDA margin rose 172 bps to 5.9% and PAT stood at INR 121mn compared to a loss
of 25mn in Q2FY'19. On a standalone basis, Revenue rose by a robust 74% YoY to INR 3,934mn on the back of strong volume growth
in RAC industry, addition of new customers and increasing share of wallet from existing customers. Room Air-conditioner(RAC) sales
volumes increased by a whopping 127% YoY to 0.4 mn units outperforming industry growth by a wide margin. EBITDA margins were
up 41 bps to 4.3%. PAT stood at INR 46mn as compared to a loss of INR 17mn during corresponding quarter last year with the company
availing MAT credit. Though at a PBT level, there was a loss of INR 55mn vs INR 39mn loss (Q2FY'19).

AEIL's RAC Sales Volumes rose by a robust 127% YoY to 0.4 mn units get delayed and get completed by FY'22 as its customers are
On a standalone basis, Revenue rose by a robust 74% YoY to INR delaying their plans. Total capex estimated for Greenfield
3,934mn on the back of strong volume growth in RAC industry, capacity expansion in South India is estitmated to be INR
addition of new customers and increasing share of wallet from 1,000mn to be spread over FY'21 & '22 to set up production
existing customers. Room Air-conditioner (RAC) sales volumes capacity of 1mn units.
increased by a whopping 127% YoY to 0.4 mn units during Q2FY'20.
• Working capital cycle shrunk to 45 days during the quarter
In H1FY'20 AEIL's RAC sales volume rose 99% YoY to 1.45mn units
compared to 57 days in Q2FY'19.
outperforming industry growth by a wide margin. RAC industry
sales volume during H1FY'20 rose in the range of 15-17%. On a • Consolidated net debt stood at INR 3,400mn& is targeted to
consolidated basis, Revenue rose 89% YoY to INR 6,232mn with further reduce to INR 3,200mn by FY'20 end.
revenue from subsidiaries (including recent acquisitions)
• AEIL has started bulk production of RACs for e-commerce
contributing INR 2,298mn (up 122%).
biggies like Amazon &FlipKart and has supplied 80,000 units
Consolidated EBITDA rose 167% Yoyto INR 366mn during H1FY'20.
Consolidated EBITDArose to INR 366mn, up 167% YoY. Cumulative
• ~ 25/30% of IDUs are still being imported into India from China
EBITDA of 4 subsidiaries (PICL, ILGIN, EVER & SIDWAL) stood at
even after increase in customs duties. However, imports of
INR 232mn during the quarter. On a standalone basis, Gross
ODUs have been significantly impacted.
Margins dropped 297 bps to 14.8% primarily due to revenue mix
witnessing change i.e. increase in number of customers opting • Order Book of Sidwal Refrigeration stood at INR 4,800mn
to source compressors from AEIL rather than sourcing at the end of the quarter with an average execution period
themselves. However, EBITDA margin rose 41 bps to 4.3% with of 18 months.
operating leverage playing out. Outlook & Valuation
Concall Highlights We continue with our Revenue and PAT estimates of 29% &39%
• AEIL is likely to outperform RAC industry growth by 4-5% points CAGR respectively during FY'19-'21 and continue to maintain BUY
in FY'20. It added Samsung as a customer during the quarter & with PT of INR 1,170 (20x FY'21 E EPS). AEIL's continuous efforts to
started supplying for 2 of its RAC models. expand customer base and increase share of wallet from
• Consolidated CAPEX is estimated to be INR 1,250mn for FY'20. customers should enable the company to remain an outperformer
Its planned geographic capacity expansion in South India may to industry growth.

Shareholding (%) Sep-19 Key Data (INR mn) FY 18 FY 19 FY 20E FY21E

Promoters 44.00 Net Sales 21281 27520 39303 45746
NSE Symbol AMBER
FII's 11.50
Growth (%) 28.8 29.3 42.8 16.4
DII's 6.00 Bloomberg Code AMBER IN
Others 38.50 EBITDAM (%) 8.7 7.7 8.7 8.7
Reuters Code AMBE.BO
Adj. PAT 629 946 1672 1837
Relative Prince Performance
Shares Outstanding (mn) 31.45 Growth (%) 183.9 50.3 76.7 9.9
140

120 Face Value 10 Adj. EPS (INR) 20 30 53 58

100 Mcap (INR bn) 30.5 P/E(x) 48.5 32.2 18.2 16.6

80 EV/EBITDA 16.3 15.3 10.2 8.5

52 Week H/L 1084/621
60 EV/Sales 1.4 1.2 0.9 0.7
2W Avg. Vol, NSE (000's) 53.1
Oct-19
Nov-18

Mar-19
Apr-19
May-19

Aug-19

Nov-19
Dec-18
Jan-19
Feb-19

Jun-19
Jul-19

Sep-19

ROACE (%) 14.9 12.7 17.5 16.7

Beta 1.1 ROAE (%) 10.0 10.1 15.7 14.8
AmberEnt Sensex

Mehul Mehta
mehul.mehta@spasec.in 1
Ph. No. 91 22 4289 5600/ Ext. 605
 Air Conditioner

Quarterly Financials (Consolidated)

INR Mn Q2FY20 Q2FY19 Q1FY20 % Chg (YoY) % Chg (QoQ)
Revenue 623.2 329.8 1235.9 89.0 -49.6
RM cost 513.9 275.1 1035.5 86.8 -50.4
Employee Cost 25.1 13.9 23.6 80.6 6.4
Other Expenses 47.6 27.1 60.5 75.6 -21.3
Total Expenditure 586.6 316.1 1119.6 85.6 -47.6
EBITDA 36.6 13.7 116.3 167.2 -68.5
Depreciation 21.3 15.0 20 42.0 6.5
Other Income -0.1 3.1 6.1 -104.5 -102.3
EBIT 15.2 1.8 102.4 742.2 -85.2
Interest 10.6 5.6 11 89.3 -3.6
PBT 4.6 -3.8 91.4 -220.0 -95.0
Tax -7.5 -1.3 27.2 485.9 -127.6
Profit After Tax 12.1 -2.5 64.2 -578.6 -81.2

Equity 31.4 31.4 31.4 - -

Face Value 10 10 10 - -
EPS 3.8 -0.8 20.4 -578.6 -81.2
-164.5% 33.7% 29.8% - -
% of Sales bps bps
RM Cost 82.5% 83.4% 83.8% -95.3 -132.4
Employee Expenses 4.0% 4.2% 1.9% -18.7 211.8
Other Expenses 7.6% 8.2% 4.9% -57.9 274.3

EBITDAM Excl Other Income (%) 5.9% 4.2% 9.4% 171.9 -353.7
PATM (%) 1.9% -0.8% 5.2% 269.9 -325.9

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 Air Conditioner

Financials
Income Statement Balance Sheet
Y/E (INR mn) FY18 FY19 FY20E FY21E Y/E (INR mn) FY18 FY19 FY20E FY21E
Net Sales 21281 27520 39303 45746 Source of Funds
Net Sales Growth(%) 28.8 29.3 42.8 16.4 Share Capital 315 314 314 314
Cost of Goods Sold 17688 23132 32848 38108 Reserves and Surplus 8613 9547 11175 12961
Employee Cost 469 588 877 1092 Total Networth 8928 9861 11489 13275
Other Optg. Exps. 1282 1672 2168 2547 Minority Interest 0 190 190 190
Total Optg. Exps. 19439 25392 35893 41747 Long Term Borrowings 433 1433 3844 3594
EBITDA(excl OI) 1842 2128 3411 3999 Short Term Borrowings 622 894 894 894
Total Debt 1055 2327 4738 4488
EBITDA Growth(%) 41.1 15.6 60.3 17.3
Deferred Tax Liability 352 452 452 452
EBIDTA Margins(%) 8.7 7.7 8.7 8.7
Other Non-Current Liabilities 293 304 304 304
Dep./Amortization 490 623 765 1011
Total Liability 10627 13134 17173 18709
EBIT 1351 1505 2646 2988
EBIT Margins(%) 6.3 5.5 6.7 6.5
Application of Funds
Interest Expense 538 246 485 630
Net Block 7100 8343 10011 10219
Other Income 87 99 221 257
CWIP 297 89 89 89
Exceptionals 0.0 0.0 0.0 0.0 Investments 144 460 2630 2630
EBT 900 1358 2382 2616 Other Non-Current Assets 104 0 0 0
Tax Expenses 271 412 710 779 Current Assets 9640 14828 17297 20655
PAT 629 946 1672 1837 Current Liabilities 6658 10586 12853 14884
PAT Growth(%) 183.9 50.3 76.7 9.9 Net Current Assets 2982 4242 4444 5771
PAT Margins (%) 3.0 3.4 4.3 4.0 Total Assets 10627 13134 17173 18709

Key Ratios Cash Flow

Y/E FY18 FY19 FY20E FY21E Y/E FY18 FY19 FY20E FY21E
Per Share Data (INR) EBT 900 1358 2338 2565
Adj.EPS 20.0 30.1 53.2 58.5 Less: Other Income/Exceptionals 87 99 221 257
CEPS 35.6 50.0 77.6 90.7
Add:Depreciation 490 623 765 1011
DPS 0.0 0.0 0.0 0.0
BVPS 283.9 314.0 365.9 422.8 Add: Interest paid 538 246 485 630
Return Ratios(%) Direct Tax Paid -271 -412 -710 -779
RoACE 14.9 12.7 17.5 16.7 Change in Working Capital -382 -2305 -168 -727
RoANW 10.0 10.1 15.7 14.8 Others 288 205 0 0
Liquidity Ratios
Cash Flow from operations (a) 1476 -384 2489 2443
Net Debt/Equity 0.0 0.2 0.4 0.3
Interest Coverage Ratio 2.5 6.1 5.5 4.7 Change in Fixed Assets -2084 -1658 -2432 -1220
Current Ratio 1.4 1.4 1.3 1.4 Change in Investments -36 -317 -2170 0
Quick Ratio 0.9 0.9 0.8 0.8 Other -22 0 0 0
Efficiency Ratios Cash Flow from Investing (b) -2143 -1974 -4602 -1220
Asset Turnover Ratio 2.0 2.1 2.3 2.4
Change in Equity 4672 -13 0 0
Inventory Days 68 74 69 69
Debt Raised/(Repaid) -2456 1474 2410 -250
Debtor Days 65 104 79 79
Creditor Days 98 125 105 105 Dividend paid 0 0 0 0
Valuation Ratios Interest Paid -538 -246 -485 -630
P/E(x) 48.5 32.2 18.2 16.6 Others Paid 87 99 221 257
P/BV(x) 3.4 3.1 2.7 2.3
Cash Flow from Financing (c ) 1765 1315 2146 -623
P/CEPS(x) 27.3 19.4 12.5 10.7
Net Change in Cash (a+b+c) 1099 -1043 32 600
Dividend Yield(%) 0 0 0 0
EV/Net Sales(x) 1.4 1.2 0.9 0.7 Opening Cash 392 1490 446 479
EV/EBIDTA(x) 16.3 15.3 10.2 8.5 Closing Cash 1490 446 479 1080

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 Air Conditioner

Nirmal Rungta Head - Equity nirmal.rungta@spasec.in Tel.: +91-022-4289 5600 Ext.552

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