Shares of a small-cap company zoomed 9.33 percent on Friday’s early trades to reach a fresh 52-week high of ₹ 2634.90 apiece on the National Stock Exchange (NSE). This happened after it announced the acquisition of a controlling stake in the company. At 02:01, its shares were trading at ₹ 2488.85 apiece, up 3.27 percent.
Amber Enterprises informed the exchanges that it has entered into definitive agreements with AmberPR Technoplast India Private Limited (“AmberPR”) and has acquired the remaining 27 percent stake in the equity share capital of the company. With this, Amber PR has become a Wholly Owned Subsidiary of Amber Enterprises with effect from 1 August 2023. Amber Enterprises paid a cash consideration of ₹ 9.44 crores for the acquisition.
Amber PR is engaged in the business of cross-flow fans and its plastic parts, fans and fan guards for outdoor units of room air conditioners, plastic parts for water dispensers and refrigeration applications (other than the automobile industry) and plastic parts for seats of trucks, tractors and buses.
Meanwhile, Amber Enterprises manufactures a variety of products like air conditioners, electronics and refrigeration solutions to railways, microwave ovens, washing machines, refrigerators, heat exchangers, sheet metal components, HVAC (Heating, Ventilation and Air Conditioning) products, services for mobility applications and so on.
This acquisition will help Amber Enterprises to grow its component segment with a focus on providing more backward integrated solutions in key components of the RAC segment viz. cross flow fan along with solutions of injection molding components for other industries viz. refrigeration and automobile segment.
About a month ago, Yes Securities had recommended a buy rating on the stock with a target price of 2929. This translates to an upside of 17.68 percent as compared to its current share price.
The brokerage said that Amber is expected to outperform the industry due to multiple factors. It has completed reliability testing for critical electronic/mechanical components for RAC and is also winning orders. The company has acquired capabilities and approvals for Railways, which is aggressively increasing AC coaches. Moreover, it expects small exports order in the current fiscal, being on the verge of completion of a 3-year testing period. Further, it is launching new product categories of wearables, hearables, and telecom products. The company’s major capex cycle is over, which will boost utilization levels and improve return ratios.
With a market capitalization of ₹ 8,120 crores, Amber Enterprises is a small-cap company. It has a low return on equity of 8.63 percent and an ideal debt-to-equity ratio of 0.76. Its shares
were trading at a price-to-earnings ratio (P/E) of 50.52, which is lower than the industry P/E of 17.84, indicating that the stock might be undervalued as compared to its peers.
The company’s promoters hold a 40.32 percent stake in it, followed by retail investors with 24.40 percent, foreign institutions with 24.20 percent, mutual funds with 8.57 percent and other domestic institutions with 2.51 percent.
Written by Simran Bafna
