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Amber Enterprises India IPO: Subscribe to the issue - IndiaNotes.com
Amber Enterprises India IPO: Subscribe to the issue
SPA Securities | Published: 17 Jan, 2018  | Source : IndiaNotes.com

AEIL is a market leader in the RAC OEM/ODM industry in India with a market share of 55.4% in terms of volume in Fiscal 2017 (Source: F&S Report). AEIL is one-stop solutions provider for the major brands in the RAC industry and currently serve eight out of the 10 top RAC brands in India.


 
-        Market leadership in the RAC OEM/ODM industry in India

 


-        One stop solutions provider for the RAC industry with high degree of backward integration

 


-         Strong customer relationships with the majority of leading RAC brands in India

 

-        R&D and product design capabilities leading to high proportion of ODM business

 


Outlook & Valuation


The Company plans to reduce its debt (~INR 3700 mn) with the IPO proceeds (~INR 4750 mn) which translates into an EPS of INR 27 for FY19E from INR 12 for FY17 assuming similar utilization levels. At the upper price band of INR 859, the issue is priced at 32x FY19E P/E. We believe additional levers like lower capacity utilization (~45%), expected CAGR growth of 25% over FY17-22E through increasing share of manufacturing being outsourced to OEM/ODM (~34% in FY17 which is anticipated to grow to ~56% in FY22) and decent growth in RAC volumes (~12.8% CAGR from FY17-22), lower RAC market penetration (~4% compared to global average of ~30%) and high entry barrier will help AEIL to grow at a robust pace going ahead. We recommend SUBSCRIBE to the issue.

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About SPA Securities

SPA Securities was promoted by a team of finance professionals in 1995 with an objective to provide value added financial services. Initially, the Group focused as a niche financial solutions provider in corporate finance and wealth management to Indian companies and high net worth individuals. In January 2000, the Group expanded its operations and the range of services. Today, SPA provides services for securities broking, merchant banking, wealth management, financial advisory, corporate finance , risk management and insurance broking.

 

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