Amber Enterprises India came under significant selling pressure in Friday’s trade, November 07, with the stock crashing 14% to hit a four-month low of ₹ 6,736 apiece after the company’s September quarter numbers missed Street estimates across all parameters.
Amber Enterprises Q2 performance
The company reported a net loss of ₹32 crore in Q2, compared with a net profit of ₹21 crore in the same period last year. The decline was driven by weak performance in its core room air conditioner (RAC) segment, impacted by unseasonal rains and the deferment of purchases between the announcement and implementation of the GST rate reduction.
PAT was further impacted by higher financing costs owing to the Power-One stake purchase, elevated inventory levels, and the share of loss from joint ventures.
Revenue from operations during the quarter also fell slightly by 2% YoY to ₹1,647 crore.
At the operating level, the company reported a 19.2% YoY drop in EBITDA to ₹91.2 crore, with margins contracting by 120 basis points to 5.5% from 6.7% in the year-ago period.
According to industry estimates, the RAC industry declined sharply by ~35% during Q2 due to non-conducive weather conditions and deferment of purchases between the announcement and implementation of GST reduction.
Amid this, the company’s consumer durables division reported an 18% YoY drop in revenue; however, the company remains optimistic about outpacing RAC industry growth in FY26. Meanwhile, its electronics division reported 30% YoY growth in revenue, while revenue from the Railway Sub-systems & Defense division rose 7% YoY in Q2.
In its earnings filing, the company said it has further strengthened order book visibility for the Railway Sub-systems & Defense division, supported by expansion of the product portfolio. The order book visibility now stands at ₹2,600 crore.
The company remains confident in the division’s long-term growth, driven by a healthy order book and an expanding product portfolio. This division now accounts for 8% of the company’s total revenue in Q2.
What investors should do with Amber Enterprises after Q2?
Global brokerage firm Jefferies noted that weakness in the RAC segment offset strong growth in the company’s components business. The reported net loss in Q2 was driven by lower margins and higher interest costs, while elevated inventory levels during the quarter are expected to normalize going forward, providing potential support to margins in upcoming periods.
Thus, the brokerage retained its ‘Buy’ rating on the Amber Enterprises share price with a target price of ₹9450.