Amber Enterprises Q2 FY27 Earnings Call: Revenue Jumps 60% To Rs. 2,627 Cr, Margin Recovery Seen From Q3

Strong Top Line, But Quality of Earnings Under Scrutiny

• Q2 FY 2026-2027 consolidated revenue grew 60% YoY to Rs.2,627 crore from Rs.1,647 crore, with operating EBITDA up 30% to Rs.127 crore from Rs.98 crore (CFO Sudhir Goyal).
• H1 FY 2026-2027 revenue of Rs.6,515 crore, up 28% from Rs.5,096 crore, with operating EBITDA up 29% to Rs.464 crore from Rs.361 crore — after absorbing a non-operational Rs.28.8 crore raw material impact from inventory fair-valued under purchase price allocation for PowerOne, Unitronics and Shogini.
• Q2 FY 2026-2027 adjusted loss after tax was Rs.57 crore, before an exceptional loss of Rs.9.5 crore (Rs.3.2 crore Ascent share purchase, Rs.6.3 crore fire-loss insurance difference).
• H1 FY 2026-2027 adjusted PAT was Rs.69 crore, before an exceptional loss of Rs.132.2 crore, of which Rs.120.9 crore related to the Ascent share purchase and Rs.6.3 crore to the fire-loss insurance difference.
• Remaining inventory PPA adjustment of about Rs.32 crore is expected to be adjusted over the next two quarters, with the full impact completed by year end FY 2026-2027.
• Net debt stood at Rs.2,582 crore with net working capital days at 53 days; full-year FY 2026-2027 capex is expected at Rs.1,800 to 2,000 crore.

41% Growth Masking a Negative-Margin Quarter

• Consumer durables revenue rose 41% YoY to Rs.1,227 crore in Q2 FY 2026-2027, but operating EBITDA was only Rs.4 crore; Nuvama Institutional Equity noted reported EBITDA of minus 1.1%, or minus Rs.14 crore.
• Sachin Gupta attributed the 41% growth to three factors: higher contribution from commercial AC, the commodity and star rating table change versus Q1 FY 2026-2027, and volume growth; he declined to quantify volume growth for Q2 FY 2026-2027.
• Analyst Naveen Kumar Dubey (Narnolia) summed H1 FY 2026-2027 additional costs at about Rs.80-85 crore, confirmed by Gupta: Rs.25 to 30 crore of wage revision from the Haryana minimum wage hike (including PICL and Pravadka) and Rs.15 to 20 crore of extra cost at the CCD 2 plant — both H1 figures, not Q2.
• Sri City greenfield facility is running at about 40% capacity utilization; Gupta expects these costs to return to normal by Q4 FY 2026-2027, and said the division's historical margins will be recovered in Q3 and Q4 FY 2026-2027.
• RAC blended price increase was 8% YoY in Q2 FY 2026-2027 (vs Q2 FY 2025-2026): commodity inflation of about 12% was offset by supplier cost improvement of about 4%.
• Only 50% of Q2 FY 2026-2027 raw material cost increases were passed on to customers; Gupta said the lagged portion will be recovered from Q3 FY 2026-2027, and full-year FY 2026-2027 guidance is unchanged.
• Wage revision impact at Amber standalone was roughly Rs.22 to 25 crore in H1 FY 2026-2027; Goyal described this as recurring rather than one-off, with Amber seeking to pass it on through higher costing.

Electronics Drives the Quarter; DRHP Limits Disclosure

• Electronics division revenue rose 94% YoY to Rs.1,248 crore in Q2 FY 2026-2027, with operating EBITDA up 195% to Rs.116 crore; Goyal cited pass-on to customers as the only factor behind the better margin, but said he could not say the pressure is fully behind — the safe statement is that it is "partially behind us."
• Iljin acquired the balance 40% stake in PowerOne and 1.5% in Ascend Circuits via compulsorily convertible preference shares under a share swap; both are now wholly owned subsidiaries of Iljin (Q2 FY 2026-2027 update, per Jasbir Singh).
• Iljin Electronics has filed its DRHP with SEBI; management will not address Iljin and its subsidiaries beyond DRHP disclosures, and declined to split PCB vs other electronics revenue for Q2 FY 2026-2027 or discuss organic vs inorganic growth detail.
• Jasbir Singh expects SEBI approval for the Iljin listing within the next 3 to 4 months (around Q4 FY 2026-2027); after approval there is a 1-year window to launch the IPO, with timing decided after approval.
• Goyal said Iljin's DRHP shows maximum-dilution shareholding for Amber; ultimate dilution might be lower than 40% depending on profitability and CCPS/private equity conversion, and Amber expects its shareholding to stay above 51% post-IPO — though he said this could not be confirmed.
• CCL (copper clad laminate) shortage is being addressed as CCL companies add capacity; Singh expects supply chain conditions to normalize within two to three quarters after Q2 FY 2026-2027, though prices continue to increase.
• Ascent Hosur expansion is expected to start by H1 calendar year 27 and the Korea Circuit project in calendar year 28, per the DRHP; exact timelines to be confirmed near commencement of operations.

Growth Guidance Trimmed; Margin Recovery Gradual

• Railway systems and defence revenue grew 15% YoY to Rs.152 crore in Q2 FY 2026-2027 with operating EBITDA of Rs.7 crore; margins were affected by commodity inflation, foreign currency fluctuation, minimum wage revision, and fixed-price contracts.
• FY 2026-2027 railway systems and defence revenue growth now expected at about 15 to 20%, lower than earlier expectations, mainly due to delays in future project offtakes.
• Jasbir Singh guided railway division EBITDA margin to 8 to 10% in FY 2026-2027, with partial recovery from around Q2 FY 2026-2027 and a gradual return to a normalized 14 to 16% margin over time (period unspecified).
• Sidwal's top-line doubling guidance over two years remains intact, citing a "more and more strengthened" order book; margin pressure stems from legacy contracts without price variation clauses and customer-side delays in pick-up.
• Goyal expects Sidwal margins to return to normalized conditions by FY 2028-2029, at normalized EBITDA margins of around 14-16% — confirming the recovery will be "more gradual" than the 19-20% levels the analyst cited. New contracts carry price variation clauses negotiated on new commodity prices.
• Sidwal's greenfield HVAC, doors and gangways facility in Faridabad is operational and under production capacity scale-up.

Quantified Sensitivities and Accounting Presentation Debates

• Direct commodity exposure at the RAC bill-of-material level is 2 to 40% of BOM (copper, aluminum, steel, resin, plus forex), and 52% including raw-material-level exposure such as steel and copper within compressors, per Sachin Gupta (period unspecified).
• Electronics components differ, with no large steel or plastics share; key components are ICs, memory, heat sinks, transformers, and capacitors, and memory prices are a moving part (period unspecified).
• Management continues to expect a consumer durables margin impact of 50 to 100 basis points in FY 2026-2027, assuming commodity prices remain at H1 levels; a further commodity spike would suppress percentage margins, with changes historically passed to customers on a quarterly lag.
• Dubey cited a positive inventory change of Rs.62 crore in COGS for Q2 FY 2026-2027 and calculated that excluding it would lift gross margin to about 21% from the reported 18.8%; Goyal said the item cannot be removed from raw material consumption and called the adjustment "a presentation only" item.
• Non-operating expenses of around Rs.32 crore were cited for the period, including foreign currency fluctuation, ESOP impact and other items at Amber standalone in consumer durables (Q2 FY 2026-2027, at PBT level).
• Net interest cost was about Rs.56 crore in Q1 FY 2026-2027 and about Rs.64 crore in Q2 FY 2026-2027 (after adjusting interest income in other income); Goyal expects a similar cost in Q3 and Q4 FY 2026-2027.

Seasonal Leverage, Mobile Diversification, Fire Recovery

• Gross debt is around Rs.4,200 crores and net debt Rs.2,572 crores as of the call (period unspecified, per Goyal); net debt rises in Q2 and Q3 due to seasonality and falls in Q4 and Q1, a pattern he expects to continue. The company could not split out how much debt is tied to the inventory increase, as creditors rise in step with commodity price-driven inventory values.
• Mobile business, including production for Oppo, OnePlus, and Realme, is being housed in wholly owned subsidiary Amber Digital Technologies; management said this makes Amber a product-focused business spanning mobile phones and backward-integrated RAC, aimed at diversifying revenue, reducing seasonality, and driving stronger returns on capital employed.
• Fire-affected facilities have resumed operations — the Iljin facility is operational, and the engine facility resumed a few days before the call and is expected to be fully operational in a couple of months (Q4 FY 2026-2027), currently ramping up; Goyal did not quantify fire losses citing the DRHP, but said there is no major customer loss as sales were served through other facilities.
• Industry is expected to grow around 20 to 22% in FY 2026-2027 — Jasbir Singh explicitly said the consumer durable business is not guided at 20% growth for FY 2026-2027, and cited industry growth of 18% for H1 FY 2026-2027, with Amber in line.
• Railway division margins are expected to rebound to normalized levels from Q2 FY 2027-2028, once old fixed-price contracts are delivered.
• Console capex guidance for FY 2026-2027 is Rs.1,800-2,000 crore, with a similar range expected for FY 2027-2028; Goyal declined a segment-wise split citing the filing. Incentive cash flows are expected from FY 2028-2029 (corrected from FY 2026-2027), once commercial production starts and applications are filed.
• Leadership changes: Sanjay Arora moved to President New Businesses and Group Evolution (overseeing the mobile division and organizational development); Satinder Singh joined as CEO and full-time director of Iljin Electronics.