Muted RAC Demand Hits

AMBER

’s Q2, Electronics and Railways Drive Strategic Expansion

reported a soft Q2FY26, impacted by weak RAC volumes and margin compression. However, its strategic diversification into electronics, defence, and mobility segments supports a strong long-term outlook. - Consumer Durables Drag: Revenue declined 2.3% YoY, with the Consumer Durables division down 18% due to a 30–35% contraction in RAC industry volumes. Unfavourable weather and GST rate transition delayed purchases. Operating margins fell 150 bps YoY, and the company posted a ₹32 crore net loss due to financing costs and inventory buildup. - Electronics Expansion: Electronics division grew 30% YoY, boosted by ILJIN, Ever, and the acquisition of Ascent Circuits. A ₹650 crore multi-layer PCB facility at Hosur is underway. Amber partnered with Korea Circuit to enter HDI and semiconductor substrate PCBs, targeting mobile, IT, and EV segments. ECMS approvals are in progress for ₹4,190 crore in capex. - Strategic Investments: Power-One (solar, EV, UPS) is projected to grow from ₹245 crore to ₹325 crore in FY26 with 15–18% margins. Unitronics (Israel-based EMS) posted $57M revenue in FY24 with 25–28% margins and 60% ROCE, offering access to US and EU markets. These moves diversify Amber’s PCBA portfolio into higher-margin verticals. - Railway & Mobility Growth: Sidwal-led segment grew 6% YoY, aided by metro project execution. Alliances with Titagarh and Yujin Machinery are progressing, with brake trials in Q3FY26. Sidwal’s new plant will be operational by Q4FY26. Defence traction and a ₹2,600 crore order book (plus ₹300–400 crore expected) support plans to double revenue in two years. Despite near-term pressure, Amber expects recovery from Q4FY26. Long-term growth is anchored in GST-led demand revival, component manufacturing, and strategic diversification. At 38x FY28E earnings, the stock remains rated Equal-weight, with upside contingent on margin recovery and demand normalization.