Buy This Midcap RAC Industry Stock With Rs. 2504 Target Price: Axis Direct Suggests

The top brokerage firm, Axis Direct has recommended investors to buy the stock of Amber Enterprises India. The company has the largest market share of ~26% (bill of materials) and is expected to benefit from the growth in the RAC demand.

Stock To Buy: Target Price

The Current Market Price (CMP) of Amber Enterprises is Rs. 2276. Axis Direct has estimated a Target Price for the stock at Rs. 2504. This stock has the potential to give a 10% return, in the upcoming 1 year. It is a mid-cap stock with a market capitalization of around Rs. 7,551 crore.

Stock Outlook
Current Market Price (CMP)	Rs. 2276
Target Price	Rs. 2504
Potential 1 year return	10.00%
52 week high share price	Rs. 4,025.95
52 week low share price	Rs. 2,040

Financial Result

In Q1FY23, the company's revenues witnessed strong growth across categories, despite a challenging environment of inflation and Forex fluctuations. The RAC volumes stood at ~12.8 lakh for Q1FY23 led by the normal summer season and extension of a heat wave in some areas during the quarter. As per management estimates, the industry volumes stood at 6.4 Mn units which are expected to touch ~8 Mn units in FY23. The company's gross margins stood at 14.4% due to an increase in the RM prices.

Stock Advantages: Axis Direct

According to Axis Direct, "Amber's revenues witnessed strong overall growth despite challenges posed by prevailing inflation. The RAC industry witnessed strong demand during the quarter despite price hikes. Furthermore, the industry is expected to grow 28-30% in volume terms and Amber is confident it to outpace the industry growth in FY23. Increasing product offerings, customer additions foray into the Commercial AC space, and entry into exports will drive the company's long-term growth."

Growth of Motor Division

The management expects the Motors division (PICL) to grow more than 35% for FY23, while it expects the Electronics division by 35%+ for FY23. The management plans to increase the share of components in the overall revenues by increasing product offerings, catering to newer geographies, adding new clients, and building a strong order book (Sidwal), the brokerage firm informs.

Company Portfolio: Amber Enterprises

Amber is a one-stop solution provider for major brands in the RAC industry. It is a leader in the room air conditioners (RAC) outsourced manufacturing space. The company has a diversified portfolio which includes RAC, RAC components, and non-AC components. It has expanded its offerings further through the acquisition of Sidwal (mobility solutions) and has recently forayed into commercial AC's as well.

Disclaimer

The above stock was picked from the brokerage report of Axis Direct. Investing in equities poses a risk of financial losses. Investors must therefore exercise due caution. Greynium Information Technologies, the author, and the brokerage house are not liable for any losses caused as a result of decisions based on the article.