Why did Amber Enterprises crash 16% despite posting record margins?

Shares of Amber Enterprises India Ltd. tumbled as much as 16 per cent on Monday, marking the stock’s sharpest single-day decline since May 2022, after the company cautioned about margin pressure in the coming quarters despite reporting a strong operational performance for the March quarter.

The sharp selloff came even as the company posted EBITDA margins above Street expectations, aided by robust growth in its electronics and railway sub-system businesses.

The company reported an overall EBITDA margin of 8.6 per cent for the quarter, up 70 basis points year-on-year and ahead of analysts’ estimate of 7.8 per cent. It also marked Amber Enterprises’ highest EBITDA margin in the last 20 quarters.

Gross margins expanded 220 basis points year-on-year to 18.8 per cent, supported by the full integration of acquisitions including Shogini Technoarts, Power One Electronics and Unitronics.

Consumer durable business sees slower growth

Revenue from the company’s core consumer durable segment grew 6 per cent year-on-year during the quarter, reflecting subdued demand trends. The segment’s EBITDA margin declined 40 basis points to 7.2 per cent due to elevated copper prices, which continued to weigh on profitability in the room air-conditioner (RAC) business.

In contrast, the electronics division delivered strong momentum, with revenue rising 21 per cent year-on-year. Margins in the segment expanded sharply by 480 basis points to 10.8 per cent.

The railway sub-system business also posted healthy revenue growth of 22 per cent during the quarter, although margins declined due to a high base effect.

Management outlook weighs on sentiment

Despite the operational beat, investor sentiment weakened after management indicated that margin pressures are likely to persist, especially in the RAC segment amid continued raw material cost inflation.

For FY26, the consumer durable business reported revenue growth of 14 per cent, in line with management guidance.

Looking ahead, Amber Enterprises expects its electronics division to maintain strong traction and deliver around 40 per cent revenue growth in FY27. The railway business is also expected to grow between 30 per cent and 35 per cent in FY27 after reporting 19 per cent growth in FY26.

The quarter additionally included a one-time exceptional impairment related to investment in Shivalik, along with losses from a joint venture, which weighed on the overall earnings performance.