Amber Enterprises organized a business update call to discuss the recent DGFT order on prohibition of import of ACs with refrigerants
- Company views this is a very positive step under the Atmanirbhar program which will boost domestic manufacturing and sourcing of ACs and components
- Management estimate is about 30% of ACs worth Rs 4000crs (2mn units) are imported annually (75-80% with refrigerants)- which creates an addressable market of about Rs 3000crs for players like Amber
- Given the RAC market is moving towards inverter ACs, it would be difficult for brands to import the indoor unit and manufacture outdoor unit in India, thereby helping the domestic industry
- Post the recent Rs400 cr QIP, company has acquired 100% stake in Sidwal Refrigeration and is setting up 2 greenfield facilities - one in Pune by 4QFY22 and one in South India by 1QFY23
- Given the cost arbitrage of Rs800-1,000 per unit in logistics, gas filling, packing etc, management believes the economic viability of importing ACs has been completely negated and import dependent players are now considering a shift in business model
- Share of outsourced ACs, currently around 40% should get a further boost in the near-term given players would take time to set up capacity; Amber would still supply components to those brands in the long term
- Capacity utilization - Volume of 3mn units in FY20 vs a capacity of 4.5mn units in ACs, can double components capacity by running two shifts vs one currently
Shares of Amber Enterprises India Ltd was last trading in BSE at Rs.2459.35 as compared to the previous close of Rs. 2180.1. The total number of shares traded during the day was 59055 in over 10778 trades.
The stock hit an intraday high of Rs. 2544.95 and intraday low of 2205.65. The net turnover during the day was Rs. 143379820.