Motilal Oswal’s Top Stock Picks: Amber Enterprises & Kirloskar Oil – Strong Growth Ahead!
Motilal Oswal Financial Services has recommended Amber Enterprises and Kirloskar Oil Engines (KOEL) as top stock picks for the week of March 24, 2025. Amber Enterprises (CMP: ₹6,888, Target: ₹7,800, Upside: 13%) is a leading contract manufacturer for air conditioners (RAC) and electronics. The company reported a 65% YoY revenue growth in Q3FY25, driven by RAC and EMS expansion. It is investing ₹6.5 billion in Ascent Circuit and collaborating with Korea Circuit under India’s PLI scheme to boost domestic manufacturing.
Expected revenue, EBITDA, and PAT CAGR for FY24-27 stand at 26% / 33% / 62%. Kirloskar Oil Engines (KOEL) (CMP: ₹748, Target: ₹1,150, Upside: 54%) is expected to benefit from stabilizing demand for power generators by FY26. The company is focusing on mid-to-high kVA power generators, industrial expansion, and B2C sales growth. EBITDA and PAT CAGR are projected at 17% and 19%, respectively, with the stock trading at an attractive valuation. Disclaimer: These are brokerage recommendations; consult a financial expert before investing.
Motilal Oswal’s Top Stock Picks: Amber Enterprises & Kirloskar Oil – Strong Growth Ahead!
Stock Recommendations from Motilal Oswal Financial Services (March 24, 2025): Top stock picks for the upcoming week, along with key reasons to consider them:
1. Amber Enterprises
- Current Price: ₹6,888
- Target Price: ₹7,800
- Expected Growth: 13%
Why Invest?
Amber Enterprises is a leading manufacturer of air conditioners (ACs) and components, working closely with major brands on a contract basis. The company is expanding into electronics manufacturing services (EMS), a move that is already delivering positive results. In Q3FY25, its revenue surged 65% year-over-year, driven by strong demand for ACs and new electronics projects.
Key Highlights:
- Investment in Growth: Spending ₹650 crore to acquire a stake in Ascent Circuit, a PCB manufacturer, to strengthen its electronics division.
- Strategic Partnerships: Partnering with South Korea’s Korea Circuit under India’s PLI (Production-Linked Incentive) scheme to boost local production of critical components.
- Government Support: Expected to benefit from policies promoting domestic electronics manufacturing.
- Strong Financials: Over FY24–FY27, revenue, EBITDA, and profit are projected to grow at annual rates of 26%, 33%, and 62%, respectively.
With its focus on innovation and favorable industry trends, Amber Enterprises is well-positioned to capitalize on the rising demand in both the AC and electronics sectors.
2. Kirloskar Oil Engines (KOEL)
- Current Price: ₹748
- Target Price: ₹1,150
- Expected Growth: 54%
Why Invest?
Kirloskar Oil Engines, a major player in engines and power generators, faced temporary challenges due to recent price hikes and a surge in orders before the implementation of CPCB 4+ regulations. However, the company expects demand to recover by FY26, with power generator sales already improving in Q4FY25.
Key Highlights:
- Growth Opportunities: Increasing demand for mid-to-high capacity power generators in industrial and residential sectors.
- Market Expansion: Strengthening its presence in industrial markets while enhancing direct-to-consumer (B2C) sales through improved distribution networks.
- Undervalued Stock: Currently trading at 23x FY25 earnings and 19x FY26 earnings, making it an attractive buy compared to industry peers.
- Steady Financials: EBITDA and profit are expected to grow at 17% and 19% CAGR, respectively, over the next few years.
Despite short-term challenges, KOEL’s focus on innovation and cost efficiency could drive significant upside as markets stabilize.
Final Thoughts
Both stocks present strong investment opportunities:
- Amber Enterprises is ideal for investors looking to gain exposure to India’s booming electronics and AC manufacturing sectors, supported by strong government incentives.
- KOEL is a good option for those seeking an undervalued stock with recovery potential, particularly as industrial demand rebounds.
Important Note:
These recommendations are based on Motilal Oswal’s analysis and should not be considered personal financial advice. Stock market investments carry risks, so always consult a certified financial advisor before making investment decisions.