Pick Of the Week – State Bank of India
Every week, we recommend a well-researched fundamental equity investment as our ‘Pick of the Week’. Handpicked after a thorough analysis of the business, industry, and economy, this recommendation has a higher potential of earning good returns over a horizon of 6 - 9 months.
Investment Rationale
Strong summer season to augur well: Traditionally Q4 &Q1 are strong quarters due to summer sales. We expect higher revenue growth going forward given Amber supplies RAC’s and AC components to 8 of 10 leading brands.
Client additions and increasing wallet share aid top-line: Higher wallet share of existing customers and increasing
demand from new customers like Samsung, Toshiba, Flipkart (MarQ) & Amazon (Amazon Basics) added in the last
two quarters to continue driving revenue growth going forward.
Adequate RM inventory and resumption of supplies from China: The available inventory can support production till
mid April; Initial shipments from chain have arrived and resumption of further supplies would ensure seamless
production during Q1FY21. Moreover its components business & Sidwal subsidiary procures the majority of the
supplies locally which in the current scenario will prove to be an advantage for Amber.
We Recommend
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CMP
₹1,215
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Target Price
₹1,337
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Potential Upside
10%
* Note: Stock Investment horizon approx. 6-9 months. CMP as on 20th March, 2020.
Please refer the research report disclaimer before making an investment decision.