Release Date: October 23, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Amber Enterprises India Ltd (NSE:AMBER, Financial) reported a robust revenue growth of 82% year-over-year, reaching INR 1,685 crores.
- Operating EBITDA increased by 85%, demonstrating strong operational efficiency.
- The company successfully turned around its profitability, reporting a PAT of INR 21 crores compared to a loss of INR 6 crores in the previous year.
- The consumer durables division saw a significant growth of 95%, driven by strong demand for room air conditioners and components.
- The electronics division almost doubled its revenue to INR 492 crores, showcasing a growth of 98.22%.
Negative Points
- The railway subsystems and defense division experienced a decline of 6% in revenue due to project delays and shifts in government priorities.
- Gross margins declined by 200 basis points, attributed to a higher proportion of finished goods sales.
- The company faces challenges in predicting future demand due to the seasonal nature of its products, particularly air conditioners.
- There is an increase in net debt levels, expected to reach INR 700-800 crores by year-end, due to investments and CapEx.
- The company remains cautious about providing aggressive future growth guidance, reflecting uncertainty in market conditions.
Q & A Highlights
Q: How is the demand for air conditioners (AC) during the festive season, and what is Amber's growth outlook for FY25?
A: Jasbir Singh, Executive Chairman and CEO, stated that the AC industry experienced significant growth due to climatic conditions, with expectations of a 25% to 30% industry growth. Amber is growing faster than the industry due to new customer additions and product initiatives, expecting to maintain this trend for the next few quarters.
Q: Why did gross margins decline despite strong top-line growth?
A: Sudhir Goyal, CFO, explained that the decline in gross margins was due to a higher proportion of finished goods sales, which typically have lower margins compared to components. The product mix varies each quarter based on customer demand.
Q: Can you provide details on the joint venture with Korea Circuit and the expected investment?
A: Jasbir Singh highlighted that the JV with Korea Circuit will focus on advanced manufacturing of PCBs, with asset turns ranging from 0.75 to 1.25 times. The investment will benefit from government incentives, reducing net CapEx. The JV includes a buyback arrangement to ensure capacity utilization.
Q: What is the current capacity utilization in the Consumer Durables division, and what is the potential revenue without significant CapEx?
A: Jasbir Singh mentioned that component plants are at 60%-65% utilization, while AC plants vary. The company can grow revenue by 40%-45% with current capacities, considering seasonal demand fluctuations.
Q: How is the Electronics division performing, and what are the growth drivers?
A: Jasbir Singh reported strong growth in the Electronics division, driven by diversification into sectors like automotive, telecom, and defense. The division is nearing 8% EBITDA margins, with plans to reach 10% in the next three years.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
