Amber Enterprises shares one of its worst single-day declines after the company's management flagged margin pressure from the hike in minimum wages in north India, rising copper-clad laminate prices and gold prices, and depreciating rupee.
Shares of Amber Enterprises was down by 14.66 per cent as of 1:50 PM, trading at around Rs 7,232 apiece. The stock has so far fallen as much as 17.65 per cent during the session to an intraday low of Rs 6,980 per share.
“Prevailing high commodity prices, currency depreciation, and minimum wage revision in UP and Haryana poses headwinds in consumer durables and electronics division. For Bare PCB business, there has been increase in input costs of copper-clad laminate. Prices has increased by more than 60 per cent in the last one year and is still increasing. Gold prices have also increased by approximately 60 per cent in the last one year, and prices still continue to increase,” Executive Chairman Jasbir Singh said during the company's post-earnings call.
The management said Haryana raised minimum wages by 35 per cent and Uttar Pradesh by 22 per cent, increasing manufacturing costs at its plants.
The management added that it expects consolidated margins to remain under pressure by 50-100 basis points in the near term, although it sees the impact as temporary and likely to normalise as macroeconomic conditions improve.
The management also said it takes longer to pass on higher costs to customers in the printed circuit board business than in the RAC business.
The management further said the PCB business takes longer to pass on higher costs because it is a Tier-2 supplier and does not directly supply to automobile companies. “In the PCB business, we are Tier 2,” Jasbir Singh said. “The lag in the PCB business to increase the cost is about two quarters.”
This is a developing story...
