Amber Enterprises India Q1 FY27 earnings call

Amber Enterprises is making a strategic foray into mobile phone manufacturing through a collaboration agreement with Oppo Mobiles India, covering brands like Oppo, OnePlus, and Realme. Trial production is slated for Q4 FY27, with commercial production commencing in Q1 FY28, targeting 8 million units in the first year and 15-16 million in the second. Additionally, the company conducted the groundbreaking ceremony for its HDI PCB facility at Jewar, Uttar Pradesh, which, along with facilities in Hosur and Shogini, aims to localize HDI PCB production and reduce import dependency.

The company reported a robust Q1 FY27, with consolidated revenue growing 13% year-on-year to ₹3,888 crores, up from ₹3,449 crores in Q1 FY26. Operating EBITDA saw a significant increase of 28% to ₹337 crores, compared to ₹263 crores in the previous year. Adjusted PAT also grew by 19% to ₹126 crores, before accounting for an exceptional loss of ₹123 crores. These figures highlight strong overall financial health despite market challenges^🌐.

The Consumer Durable division recorded an 8% YoY revenue growth to ₹2,758 crores and a 12% increase in operating EBITDA to ₹214 crores, benefiting from pre-stocking and a premium product mix. The Electronics division was a standout performer, with revenue surging 29% to ₹985 crores and operating EBITDA more than doubling by 117% to ₹107 crores, achieving a margin of 10.8%. In contrast, the Railway Sub-system & Defense division's revenue grew 18% to ₹144 crores, but its operating EBITDA declined 26% to ₹16 crores, impacted by product mix, commodity inflation, currency depreciation, and minimum wage revisions.

Management acknowledged ongoing margin pressure from elevated commodity prices, currency depreciation, and minimum wage revisions, expecting this to persist through H1 FY27 before normalizing. Specifically, the bare PCB business experienced margin compression due to rising copper clad laminate costs, with a 2-quarter lag in passing on price increases. However, the company is confident in its B2B model to eventually pass on these costs, with PCB margins expected to return to a normalized 15-16% from Q3 onwards, provided no further CCL price increases occur.

Following an incident at the ILJIN Electronics facility, management confirmed receiving permission to reconstruct the facility and stated that the company is adequately insured. Business operations have been shifted to other locations to mitigate impact, and a full assessment of the loss is underway. Despite the disruption, the company remains hopeful of meeting its guided numbers, indicating resilience and effective contingency planning.

The Electronics division's strong growth is attributed to all three verticals: PCBA, PCB, and Industrial Automation/Power Electronics, driven by new customers and applications. The company is expanding its capacity with significant capex, including ₹3,200 crores for Jewar and ₹1,000 crores for Hosur. Management highlighted the vast Total Addressable Market (TAM) for electronics, currently at $185 billion and projected to grow to $300 billion by FY30, with the PCB, PCBA, and power electronics segment alone expected to grow from $16 billion to $35-40 billion, positioning Amber as a dominant player.

Amber Enterprises is undertaking substantial capital expenditure to fuel its growth. This includes investments of ₹3,200 crores for the HDI PCB facility in Jewar, ₹1,000 crores for the multilayer PCB facility in Hosur, and ₹500 crores in Shogini, all approved under the ECMS scheme. The Hosur plant is expected to be operational this financial year, while the Jewar facility's trial production is anticipated in 18 months. Additionally, construction for a new AC plant is planned to start in 2028, with trial production by 2029, further expanding the company's manufacturing footprint.