CRISIL upgrades ratings of Amber Enterprises India Limited

CRISIL Ratings has upgraded its ratings on the bank facilities of Amber Enterprises India Ltd (Amber; part of the Amber group) to 'CRISIL AA-/Stable/CRISIL A1+' from 'CRISIL A+/Positive/CRISIL A1'.

The upgrade reflects better than expected business performance in second half of fiscal 2021, esp. operating profitability. The group achieved revenue of Rs 2363 crore in second half of fiscal 2021 at operating margin of 8.6% compared to CRISIL Ratings' expectation of 6.5%. The higher operating profitability was on account of group's ability to pass on the entire price increase in raw material prices to its end customers while also continuing several cost cutting measures within the group.

The upgrade also factors in continued expectation of increase in revenue aided by the recent changes in the domestic air-conditioning (AC) manufacturing ecosystem which includes ban on import of refrigerant ACs and production-linked incentive (PLI) scheme for AC industry. The group is expecting addition of new customers for AC manufacturing while also expecting increase in contribution from existing customers who were importing the refrigerant ACs. Since the supply of summer season of 2022 is only 6 months away, hence Amber group is best placed to grab more orders as setting up of new factories is a capital intensive and a time taking venture. Revenues are thus expected to increase significantly from summer season of 2022 onwards.

The financial risk profile of the group is strong with capital structure being healthy as reflected by total outside liabilities to tangible networth (TOLTNW) of less than 1.2 times estimated as on March 31, 2021. Debt protection metrics were also comfortable as reflected by estimated interest coverage of around 6 times and net cash accrual to adjusted debt of 0.44 times for fiscal 2021. Despite, group expected to undertake debt worth Rs 150 crore for ongoing capital expenditure worth at least Rs 300 crore for its 2 new facilities, one in Maharashtra and another anticipated in Southern India, the financial risk profile is expected to continue to remain strong.

The ratings continue to reflect the Amber group's established market position as a vendor for leading air conditioner (AC) manufacturers, the group's diversified customer base, high operating efficiency, and strong financial risk profile. These strengths are partially offset by exposure to risks related to seasonal business and the group's large working capital requirement.

Shares of Amber Enterprises India Ltd was last trading in BSE at Rs. 2992.3 as compared to the previous close of Rs. 2980.3. The total number of shares traded during the day was 5946 in over 1761 trades.

The stock hit an intraday high of Rs. 3014.05 and intraday low of 2959.7. The net turnover during the day was Rs. 17705687.

Source : Equity Bulls

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