India’s largest contract manufacturer for room air conditioners posted a blockbuster quarter, proving it can grow even when the industry it dominates is going nowhere fast
There is a certain audacity in posting 38% revenue growth in a quarter when your core industry is essentially flat. Amber Enterprises, India’s largest original design manufacturer for room air conditioners, managed exactly that in Q3FY26 — and in doing so, reminded the Street why the company has quietly become one of the more compelling industrial stories in Indian manufacturing.
Revenue for the December quarter came in at ₹29.4 billion, comfortably ahead of analyst expectations. EBITDA surged 55% year-on-year to ₹2.5 billion, with margins expanding 90 basis points to 8.4%. Adjusted profit after tax rose 42%. On paper, this is a company firing on all cylinders.
Yet the headline number masks something more interesting: the engine driving Amber is no longer just air conditioners.
The AC Paradox
The Indian RAC industry has had a miserable year. Management on the earnings call was blunt about the numbers — the industry declined 5-10% in the first quarter, cratered roughly 35% in the second, and managed only a modest recovery in the third quarter driven by pre-buying ahead of new energy efficiency norms. For the full year, the industry is expected to remain largely flat.
Amber’s consumer durables segment, however, grew 27% in the same quarter. “The company remains confident of 14-15% growth, outperforming the industry,” notes Prabhudas Lilladhar in its post-results note, attributing the beat to “customer additions, higher wallet share, strong non-AC component traction, new products, and expansion in commercial AC.”
HDFC Securities echoes the optimism, noting that “RAC channel inventory is close to normal levels” and that Amber’s consumer durables segment “should outperform the market with 13-15% growth” even as the broader industry treads water.
The composition of the consumer durables business tells the story. RAC finished goods now contribute roughly 60% of segment revenue, while components account for 40% — split evenly between RAC and non-RAC components. That non-RAC piece, encompassing refrigerator, washing machine, microwave, telecom, and energy meter components, is where much of the incremental growth is coming from.
Electronics: The Real Story
If consumer durables is the foundation, electronics is fast becoming the growth engine that analysts are most excited about. The segment delivered a staggering 79% year-on-year revenue growth to ₹8.45 billion, and — perhaps more importantly — EBITDA margins expanded 320 basis points to 10.4%.
Prabhudas Lilladhar highlights that Amber “has passed the higher input cost to the customer and expects double-digit margin in FY27” for its electronics division — a meaningful inflection for a segment that was margin-dilutive not long ago.
HDFC Securities flags the PCB manufacturing foray as a potential game-changer, noting that Amber has “received government approval under ECMS for Ascent Circuits and Ascent K-Circuit to manufacture various PCB types.” The planned capital expenditure is substantial: ₹10 billion for Ascent Circuits in phases, with trial production expected from Q2FY27, and ₹32 billion for Ascent K-Circuit, with the first phase of ₹12 billion targeted for completion by Q2FY28. This is a company making serious bets on India’s electronics manufacturing ambitions.
Railways: The Order Book Speaks
The railways subsystem segment, often overlooked, grew 20.2% in the quarter with margins expanding 290 basis points to an impressive 14.2%. The order book stood at over ₹26 billion for the first nine months.
Prabhudas Lilladhar notes that the “company expects to double the revenue in next two financial years” in its railway division, a target that HDFC Securities considers credible, citing “strong order book visibility.”
However, no quarter is without its warts. Amber booked an exceptional loss of approximately Rs 1 billion on account of what HDFC Securities describes as “impairment of investment and loan to Shivalik — JV of subsidiary due to financial stress issues.” This dragged reported numbers into a net loss of ₹93 million for the quarter — an ugly headline that obscures an otherwise strong operating performance.
The Take
Both brokerages have revised their earnings estimates upward. Prabhudas Lilladhar has lifted its target price to ₹8,617 from ₹8,263, valuing the stock on a sum-of-the-parts basis at “23x EV/EBITDA Mar’28 for its Consumer Durables segment, which implies 20x EV/EBITDA Mar’28E and 41x Mar’28E earnings on consolidated basis.” The brokerage projects a revenue, EBITDA, and PAT CAGR of 21.2%, 32.6%, and 59.7% respectively over FY26-28, with “EBITDA margin expanding by ~150bps to reach 8.8% by FY28E.”
HDFC Securities, using a DCF-based approach, arrives at a revised target of ₹8,520, after increasing “revenue estimates by 4% each, and APAT estimates by 1/3/9% for FY26/27/28E.” The two-year revenue CAGR of 51% that HDFC flags for the quarter underscores the sheer pace of Amber’s transformation.
At a current price of around Rs 7,048, the stock trades at a premium that reflects the market’s confidence in Amber’s evolution from an AC contract manufacturer into a diversified industrial platform. The capex budget of Rs 8 billion for FY26, with gross block capitalisation expected to reach Rs 11-12 billion in FY27, signals that management is investing for a much larger business.
Still, in an Indian manufacturing landscape where the government is spending aggressively on railways, pushing electronics localisation through production-linked incentives, and where climate change is making air conditioning less a luxury and more a necessity — and going by the optimism of brokerages, Amber Enterprises sits at the intersection of several powerful tailwinds.
