CLSA upgrades this small-cap consumer discretionary stock to buy; shares jump up to 6%

Stock market today: Shares of Amber Enterprises India in Friday’s session (March 22, 2023) surged up to nearly 6 per cent during the trade after global brokerage CLSA upgraded the stock to ‘buy’ from the earlier ‘outperform’ rating. The new higher revised target on the stock is Rs 4,300, a 26 per cent potential upside from the previous close. The earlier set price target for the stock by CLSA was Rs 4,130 per share.

The brokerage maintains that after the recent share price correction to the tune of 14 per cent in a month, the stock provides an attractive entry point.

At around 2:11 pm, shares of the company traded with gains of 4.67 per cent or Rs 159.35, at Rs 3,568 apiece on the BSE.

CLSA is of the view that weakness at the company, likely driven by softness in broader markets and modest near-term earnings, is overdone. 

In addition, the medium-term thesis of strong growth in non-RAC or non-room air conditioners remains intact, assuming that the market share of the RAC segment will reduce by 19 per cent/ 10 per cent by FY30/FY40. Other segments are likely to contribute 50 per cent of revenue in the next five years, added the brokerage.

On Thursday, the company entered into a 50:50 joint venture agreement with Resojet to carry on the business of manufacturing fully automatic top-loading and front-loading washing machines and their components. 

In the quarter ended December, the company posted a standalone net loss of Rs 17.8 crore as against a net loss of Rs 5.5 crore in the same period of the previous year.

Shares of Amber Enterprises have delivered a decent return of over 91 per cent, outperforming Nifty’s return of over 29 per cent in the same period.

The consensus recommendation on the stock from 18 analysts is ‘hold’, with six of them signalling ‘a'strong buy’ call.

Amber Enterprises is an original equipment manufacturer that offers products including air conditioners, microwave ovens, refrigerators, washing machines, heat exchangers, multi-flow condensers, luminaries, and vacuum-forming components, among others.