Amber QIP test for Atmanirbhar2 min read . Updated: 29 Aug 2020, 07:00 AM IST
- Amber is preparing to launch a qualified institutional placement (QIP) offering next month
- The govt’s push for local manufacturing is a boost for firms such as Amber
MUMBAI : The upcoming ₹500 crore share sale of Amber Enterprises India Ltd, a contract manufacturer of consumer durables, will be a test of investors’ faith in companies that stand to gain from India’s mission for self-reliance.
Amber is one of India’s largest contract manufacturers of air-conditioners and spares for top global brands such as LG, Daikin, Blue Star, Panasonic, CarrierMidea and Hitachi.
“Amber is preparing to launch a qualified institutional placement (QIP) offering next month. The company’s shareholders will approve the fundraising resolution by 3 September," a person aware of the matter said on condition of anonymity. Investment banks Edelweiss and JM Financial are advising the company on the fundraising, the person added.
In a 12 August note to shareholders, Amber said it intends to raise funds for capital expenditure required for the long-term growth of its businesses; extend loans to and invest in its subsidiaries for their long-term and short-term business purposes, repay debt, and make strategic acquisitions or joint ventures.
“The government’s push to make India a manufacturing hub, the inclusion of air-conditioner manufacturing among 12 champion industries, and the import substitution scheme for these products—these all are strong tailwinds for companies such as Amber," a second person said on condition of anonymity.
“With global trade tensions involving China and the recent border tensions with India and its impact on the trade relations between the two countries, these factors are making global brands explore a China-plus-one strategy for their supply chains, which will bring new business for Indian companies. So, Amber and others will raise money to take advantage of these shifts in the industry," the person added.
Emails sent to Amber, Edelweiss and JM Financial remained unanswered.
Amber’s fundraising plans come at a time when the Union government’s ambitious Atmanirbhar Bharat plan, which aims to make India a nerve centre of global supply chains, has buoyed its stock.
Since the start of the yeaminr, Amber shares have gained 62% to ₹1,811.45, despite widespread disruptions caused by the covid-19 pandemic. Meanwhile, the benchmark Sensex is still down 4.3% from where it started the year, despite the rally in recent months.
“Amber would be the primary beneficiary of the government’s focus on import substitution in room ACs. About 3 million units are imported yearly of approximately 7 million market size, which can increase to 14 million in the next 4-5 years," brokerage Anand Rathi said in a 12 August report.
“The sharper focus on import substitution, supported by a favourable policy intended to create an entire ecosystem for component manufacturing (excluding compressors) augurs well for Amber and can consolidate its leading position," the report added.
Other electronics and white goods makers too have gained from the push for local manufacturing.
Dixon Technologies (India) Ltd, which makes consumer electronics, home appliances and mobile phones, has seen its shares more than double since the start of the year to ₹8,310.60. The board too has approved an enabling resolution to raise ₹200 crore.