Amber Enterprises shares jump 11%; UBS flags weak margins

Amber Enterprises India Ltd shares jumped 11% in Friday's trade after the company reported a 60% year-on-year (YoY) increase in consolidated revenue for the September quarter of FY27. However, brokerage firm UBS flagged pressure on margins, with earnings before interest, taxes, depreciation and amortisation (EBITDA) falling short of estimates despite the strong revenue growth.

The company reported consolidated revenue from operations of Rs 2,627 crore in Q2 FY27, up 60% from the corresponding quarter last year. Operating Ebitda rose 30% YoY to Rs 127 crore. Amber Enterprises reported an adjusted loss after tax of Rs 57 crore for the quarter. The adjusted PAT figure excludes an exceptional loss of Rs 9.5 crore, according to the company's investor release.

Amber Enterprises shares touched a high of Rs 6,909 on Friday, rising 11.17% from their previous close of Rs 6,215. The stock opened at Rs 6,050 and touched a low of Rs 6,012.15 during the session.

UBS retained its 'Neutral' rating on Amber Enterprises, with a 12-month target price of Rs 7,600. Based on the closing price of Rs 6,215 on November 12, the target implied an upside potential of around 22%.

UBS said Amber's revenue was 20% above Bloomberg consensus estimates and 24% higher than its own estimates. However, Ebitda missed consensus and UBS estimates by 29% and 32%, respectively. The brokerage noted that the Ebitda margin came in at 3.7%, compared with 5.5% in the year-ago quarter and estimates of 6.4% and 6.9%, respectively. UBS also reported a net loss of Rs 80 crore, against estimates of losses of Rs 14 crore and Rs 3.5 crore from consensus and UBS, respectively.

UBS on Amber Enterprises: Segment-wise performance

UBS highlighted mixed performances across Amber's three key business divisions. The consumer durables division reported 41% YoY revenue growth, beating UBS estimates by 23%. However, the division posted an Ebitda loss of Rs 13.9 crore, against the brokerage's expectation of an Ebitda profit of Rs 35.6 crore. UBS attributed the weakness to commodity inflation, foreign exchange fluctuations, minimum wage revisions and ramp-up expenses at the new Sri City plant.

The electronics division delivered a stronger performance, with revenue increasing 94% YoY and beating UBS estimates by 30%. Ebitda rose 179% YoY, exceeding the brokerage's estimates by 18%. However, its EBITDA margin of 8.4% was below UBS' estimate of 9.2%.