The third IPO issue by Amber Enterprises of 2018 after Apollo Microsystems and Newgen is to hit the market today. The company is one of India's leading air-conditioner equipment supplier and through the public issue worth Rs. 600 crore plans to raise funds for paring its debt. The issue opens on January 17, 2018 and would close on January 19, 2018.
Issue Details: The public issue will include fresh equity issuance valued at Rs. 475 crore at a price band of Rs. 855-859 and OFS in which promoters of the company will partly sell their stake. After the share sale, promoter holding will fall to 44 percent from 59 percent.
Edelweiss Financial Services Ltd, IDFC Bank Ltd, SBI Capital Markets Ltd and BNP Paribas are the lead managers of the IPO issue.
As part of the anchor book allocation, the company on Tuesday raised a sum of Rs. 178.71 crore by selling shares to institutional investors.
Company profile: The company functions as OEM and designer of ACs and as at the end of March 2017 held 55.4% of the total market share. Window and split AC as well as inverter ACs are manufactured by the company in the range of 0.75-2 tons.
The company's top clientele are 8 of the 10 AC makers including Daikin, Hitachi, Whirlpool, Voltas, LG and Panasonic.
The company is also in the area of manufacturing components for automobile and household appliances. But primarily draws its revenue from AC manufacture.
Company financials: As at the end of second quarter ending September, the company reported a net worth of Rs. 363 crores. Revenue of the company has been increasing year on year @ 17% while net profit to March 2017 increased by 9%.
Revenue and net profit of Q2 FY18 stands at Rs.938 crore and Rs. 27 crore respectively.
• Earnings before interest, tax and depreciation and amortization or EBITDA and margins stood at Rs 84 crore and 9 percent, respectively.
The company has no competitor listed on the exchanges but its area can be compared to Dixon Technologies who is an OEM supplier for washing machines, LED etc.
Valuation: Considering the upper end of the price band, the company is offering shares at 96.8 times its earnings. As at the end of March 2017, earning per share or EPS after fresh issuance of shares works out to be 8.87.
Conclusion: Brokerages citing strong fundamentals of the company, financial performance together due to its leadership position and good future prospects in the white goods space has given a Subscribe rating to the issue.