Amber Enterprises showcased a strong financials in the fourth quarter of financial year 202-23. However, the outlook seems gloomy. In an interaction with CNBC-TV18, Jasbir Singh, Amber Enterprises said muted growth is expected in room AC division in the first quarter of financial year 2023-24 due to unseasonal rains. However, the mobility and electronics segments are expected to perform well.

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In the last quarter of financial year 2022-23, Amber Enterprises revenues jumped 55 percent to Rs 3,003 crore. Gross margins declined 20 bps to 13.6 percent versus 13.8 percent in the same quarter of last year. EBITDA margins improved 30 bps to 6.8 percent versus 6.5 percent year on year. Net profitability at Rs 108 crore grew 82 percent year on year.

The Room AC component segment, with highest contribution to company revenues, grew 55 percent to Rs 2,371 crore revenues, while the segmental margins were flat at 6 percent. The electronics division also marked strong growth of 69 percent to Rs 415 crore in the quarter. The growth in mobility and motor division was 38 percent and 31 percent respectively.

While interacting with CNBC-TV18, Singh added that currently the company is witnessing dullness in the room AC segment on account of erratic weather conditions. "The unseasonal rains created high channel inventory. However, if summers prolong in June, the Room AC demand may witness a pickup."

Electronics division is diversified across consumer durables, home appliances, hearables, wearables and telecom equipments. The electronics division has nearly doubled in last four years to Rs 1,100 crore with large part of growth coming in from wearables and hearables segment. "We have added three customers in wearables and hearables segment."

Alongside, there are new customers being added in the telecom equipment segment. The hearables and wearables together contribute 15 percent to electronics division, which is expected to 25 percent.

"The electronics division is expected to grow 30 to 35 percent in next 2 years" Singh says. The electronics division margins are expected to improve by 50-100 bps from current 5 percent.

Furthermore, the company return on capital employed is currently at 15 percent which is expected to improve to 19-21 percent in next three years.

Amber Enterprises share is trading flat on the exchanges on May 22.