Dixon Technologies Vs Amber Enterprises: The government’s decision to reduce import duties on spare parts for mobile phones caused a significant surge in the share prices of these companies. Read this article as we compare Dixon Technologies Vs Amber Enterprises, the two companies set to benefit from the favourable regulatory shift.

Dixon Technologies Vs Amber Enterprises – Company Overview

Amber Enterprises

Established in 1990, the company has solidified its position as the foremost backward-integrated market leader in India’s room air conditioner (RAC) industry.

With a robust presence across both components and finished goods segments in the HVAC industry, its diverse product portfolio encompasses room ACs, including indoor and outdoor units, as well as window ACs, alongside reliable critical components and mobility applications catering to railways, metros, buses, and defense sectors.

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Originally operating from a single factory in Rajpura, Punjab, the company has expanded exponentially, boasting 27 state-of-the-art manufacturing facilities strategically located across nine key regions in India, ensuring proximity to its customer base.

Amber’s emphasis on backward integration and formidable R&D capabilities further consolidate its position, securing a significant share in the Original Design Manufacturing (ODM) industry.

Dixon Technologies 

Dixon Technologies (India) Limited stands as India’s foremost design-centric solutions company, excelling in manufacturing consumer durables, lighting, and mobile phones.

Founded in 1993 by Mr. Sunil Vachani, Dixon operates across various electronic product verticals, including consumer electronics, home appliances, lighting, CCTV cameras, and mobile phones, with a recent venture into wireless audio solutions through a strategic JV.

Headquartered in Gurgaon, the company boasts 21 manufacturing facilities across Noida (Uttar Pradesh), Dehradun (Uttarakhand), Ludhiana (Punjab), and  Chittoor  (Andhra Pradesh).

Dixon offers a diversified product portfolio, including (i) consumer electronics like LED TVs; (ii) home appliances like washing machines; (iii) lighting products like LED bulbs and tube lights and downlighters; (iv) mobile phones and smartphones; (v) CCTV and DVRS; and (vi) medical equipment. and provides solutions in reverse logistics, notably repair and refurbishment services.

Dixon Technologies Vs Amber Enterprises – Segment Analysis

Amber Enterprises:

The business divisions of Amber Enterprises include:

  • HVAC Static Application Division
  • Mobility Application Division
  • Motor Division Electronics
  • Components Division 
Amber Enterprises - Revenue Contribution

Dixon Technologies 

The business divisions of Dixon Technologies include:

  • Consumer Electronics
  • Lighting
  • Home Appliances
  • Mobile Phone, EMS division, and Others
  • Security Systems
Dixon Technologies - Revenue Contribution

Dixon Technologies Vs Amber Enterprises – Industry Overview

India continues to remain a bright spot in the global economic landscape. It leverages its demographic dividend, digital transformation, and innovation potential to drive sustained growth.

According to the economic survey, real GDP growth is forecast to reach 6.5% in FY24. Though lower than in FY23, India will still be one of the fastest-growing economies in the world.

In the fiscal year 2022-2023, India’s air conditioning (AC) market reached 8.5 million units, with Amber securing a significant 29.4% market share in terms of value. The nation has experienced remarkable growth in electronics manufacturing over the past five years, driven by proactive government policies.

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The electronics industry is projected to be a key driver of economic development, presenting lucrative opportunities for Amber. Household penetration of Room Air Conditioners (RACs) in India remains low at 12–14%, compared to much higher levels in other countries. which highlights the vast untapped market potential for RACs in India, signaling promising prospects for Amber’s future growth and expansion.

The total addressable EMS market in India was valued at Rs 3,372 billion in FY22 and is expected to grow to Rs 7,504 bn in FY26 with a CAGR of 22%. However, the contribution of Indian EMS companies is around 44%, which is valued at Rs 1,469 bn in FY22, which is expected to grow at a 32% CAGR to reach Rs 4,502 bn by FY26.

Dixon Technologies Vs Amber Enterprises – Financials

Revenue & Net Profit

Amber Enterprises reported revenue of Rs. 6927 crore in FY23 against Rs. 4206 crore in FY22, indicating an increase of ~65%. Its profitability has increased to Rs. 164 crore in FY23 from Rs. 111 crore, indicating an increase of ~48%. Revenue and profits increased significantly due to timely investments in required capex, which helped in an increase in profitability and improved share in RAC manufacturing and other segments.

Dixon Technology reported revenue of Rs. 12192 crore in FY23 against Rs. 10697 crore in FY22, indicating an increase of 14%. Its profitability has increased to Rs. 255 crore in FY23 from Rs. 190 crore, indicating an increase of 34%. They are relentlessly focusing on optimizing their costs and ensuring prudent working capital management.

The significant surge in demand, driven by the increased purchasing power of consumers, increased revenues.

On a 4-year CAGR basis, Dixon Technology has grown at a higher growth rate compared to Amber Enterprises in terms of revenue and profit.

The figures below compare the revenue & profits of Dixon Technologies Vs Amber Enterprises over the last five fiscal years.

Financial Year/ ParticularsRevenue (In Cr.)Net Profit (In Cr.)
Amber EnterprisesDixon TechnologiesAmber EnterprisesDixon Technologies
2023692712192164255
2022420610697111190
20213031644883160
202039634400164120
2019275229849563
4-Year CAGR25.96%42.17%14.63%41.84%

Profit Margins

The operating margins of Amber Enterprises and Dixon Technologies stand at around 4.78% and 3.31%, respectively, with Amber slightly leading. On a 5-year average basis, Amber has a higher OPM.

The net profit margins of Amber Enterprises and Dixon Technologies stand at around 2.36% and 2.1%, respectively. However, looking at the 5-year average, we find Amber has a higher NPM.

The figures below compare the profit margins of Dixon Technologies Vs Amber Enterprises over the last five fiscal years.

Financial Year/ ParticularsOperating Profit MarginNet Profit Margin
Amber EnterprisesDixon TechnologiesAmber EnterprisesDixon Technologies
20234.783.312.362.1
20224.772.792.641.8
20215.313.792.742.5
20205.874.354.142.7
20195.833.983.442.1
5-year Average5.313.643.062.24

Return Ratios

Amber reported a return on equity of 8.8%, lower than its 5-year average of 9.28%. Dixon reported a return on equity of 19.88%, compared to its 5-year average of 19.92%.

Considering the return on capital employed, Amber and Dixon reported 15% and 23.22%, respectively. Amber returns are higher than its 5-year average of 13.7%, while Dixon couldn’t beat its 5-year average of 23.53%.

The figures below compare the return on equity & return on capital employed by Dixon Technologies Vs Amber Enterprises over the last five fiscal years.

Financial Year/ ParticularsReturn On EquityReturn On Capital Employed
Amber EnterprisesDixon TechnologiesAmber EnterprisesDixon Technologies
20238.819.881523.22
20226.619.071119.39
20215.921.679.325.07
202015.122.2518.528.9
20191016.7514.721.09
5-year Average9.2819.9213.723.53

Leverage Ratios

The debt-to-equity ratio of both companies during the last 5 years indicates a positive signal. Both companies didn’t need to rely more on borrowed capital. The 5-year average debt to equity of Amber Enterprises and Dixon Technologies stands at 0.40 and 0.26, respectively, which means they can retain more of their revenue as they do not have a huge obligation towards the repayment of debt and interest.

Regarding interest coverage ratio, Dixon leads with an ICR of 8.56, while Amber’s figure comes up to 4.21x. ICR above 1.5x is an acceptable ratio, according to which both companies are considered safe.

Debt to Equity and ICR

The figures below compare the debt-equity and ICR of Dixon Technologies Vs Amber Enterprises over the last five fiscal years.

Financial Year/ ParticularsDebt to EquityInterest Coverage Ratio
Amber EnterprisesDixon TechnologiesAmber EnterprisesDixon Technologies
20230.70.144.218.56
20220.590.466.658.66
20210.220.213.938.91
20200.280.155.555.48
20190.230.366.534.75
5-year Average0.40.265.377.27

Dixon Technologies Vs Amber Enterprises – Key Metrics

ParticularsAmber EnterprisesDixon Technologies
CMP42106312
Market Cap(Cr)1416037754
EPS46.559.2
Stock P/E96.8107
P/B7.7926.1
Promoter Holdings40.31%33.63%
FII Holdings28.29%17.41%
Dividend Yield0.000.19

Dixon Technologies Vs Amber Enterprises – Future Plans

Amber Enterprises

  • The company expects to improve its ROCE significantly from the current levels and is expected to be 19%–21% in the next 2–3 years.
  • Its primary objective is to be the number one OEM/ODM parts manufacturing company and to be the first choice of the customer.
  • Amber aims to strengthen its position not just in the Indian RAC market but also in the B2B space as a component manufacturer.
  • AEIL also aims to ensure that every unit within its group is significantly powered by renewable sources soon.

DixonTechnologies

  • The company aims to deepen its involvement in end-user applications, particularly in computers and information technology (IT).
  • The company plans to explore mobility and communication through alliances and investments.
  • The company is planning for the expansion of organized retail in Tier 2 and Tier 3 cities.
  • Dixon plans to manufacture DC refrigerators of various sizes, ranging from 190 litres to 235 litres, with multiple features.

Conclusion

As we conclude the article on the comparison between Dixon Technologies Vs Amber Enterprises, we have understood their business, financials, and future outlook. Both are major players in the consumer durables industry, with almost similar financials. Further analysis is required to understand the risk & return characteristics and suitability before investing. Do leave your thoughts in the section below.

Written by Ashish Agarwal


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