1
Please refer to important disclosures at the end of this report
1
1
AIA Engineering is one of the world’s leading manufacturers of value-added,
impact abrasion, and corrosion resistant High Chrome Mill Internals (HCMI).
The company has delivered 10% revenue CAGR for 5 years ended FY19. Net
profit also grew at a speedy 19.2% during the said period. However, in
1QFY19 there was a slowdown in the revenue growth due to shut down in a
large mine in Brazil. This resulted in decline in volume by 1% yoy but the
company took a 4.3% hike in realization. The combined effect resulted in
sales growth of 3.3%. Nonetheless, operating profit margin widened by
111bps yoy owing to better sales mix. The company also commissioned
Phase-2 of its Kerala GIDC plant, increasing manufacturing capacity to 390k
tonnes (+50k tonnes) and Phase-3 will be commissioned by Dec’20.
Going forward, it expects sales volume of 15,000 tonnes by FY21 after
having completed a trial for a gold mine in Africa. It will also be
commissioning an additional 50,000MT capacity for these liners by Dec’20
at a cost of `250cr towards grinding media mill liners.
On the balance sheet front, the company is virtually debt-free. The working
capital days were elongated to 133 days on account of accumulation of
ferrochrome (raw material) to avoid buying it at a high price later. This will
help in improving margins and working capital days is expected to normalize
after this inventory effect. The company’s stocks trade at 4.5x of its book
value and delivers 15.7% RoE. It also pays dividend each year averaging to
20%. Hence Buy.
BUY
CMP `1,734
52 Week High / Low
1865/1453
Avg. Daily Volume
1,815
Castings/Forgings
Market Cap (` cr)
1,63,540
2
BSE Sensex
38,594
Nifty
11,440
Face Value (`)
Reuters Code
AIAE.BO
AIAE IN
0.4
Jaikishan Parmar
022 – 3935 7600 Ext: 6810
jaikishan.parmar@angelbroking.com
AIA Engineering Ltd
Others | Castings/Forgings
Sept 25, 2019
2
AIA Engineering | Castings/Forgings
2
Research Team Tel: 022 - 39357600 E-mail: [email protected] Website: www.angelbroking.com
DISCLAIMER
Angel Broking Limited (hereinafter referred to as “Angel”) is a registered Member of National Stock Exchange of India Limited, Bombay
Stock Exchange Limited and Metropolitan Stock Exchange Limited. It is also registered as a Depository Participant with CDSL and
Portfolio Manager with SEBI. It also has registration with AMFI as a Mutual Fund Distributor. Angel Broking Limited is a registered entity
with SEBI for Research Analyst in terms of SEBI (Research Analyst) Regulations, 2014 vide registration number INH000000164. Angel
or its associates has not been debarred/ suspended by SEBI or any other regulatory authority for accessing /dealing in securities
Market. Angel or its associates/analyst has not received any compensation / managed or co-managed public offering of securities of
the company covered by Analyst during the past twelve months.
This document is solely for the personal information of the recipient, and must not be singularly used as the basis of any investment
decision. Nothing in this document should be construed as investment or financial advice. Each recipient of this document should make
such investigations as they deem necessary to arrive at an independent evaluation of an investment in the securities of the companies
referred to in this document (including the merits and risks involved), and should consult their own advisors to determine the merits and
risks of such an investment.
Reports based on technical and derivative analysis center on studying charts of a stock's price movement, outstanding positions and
trading volume, as opposed to focusing on a company's fundamentals and, as such, may not match with a report on a company's
fundamentals. Investors are advised to refer the Fundamental and Technical Research Reports available on our website to evaluate the
contrary view, if any.
The information in this document has been printed on the basis of publicly available information, internal data and other reliable
sources believed to be true, but we do not represent that it is accurate or complete and it should not be relied on as such, as this
document is for general guidance only. Angel Broking Limited or any of its affiliates/ group companies shall not be in any way
responsible for any loss or damage that may arise to any person from any inadvertent error in the information contained in this report.
Angel Broking Limited has not independently verified all the information contained within this document. Accordingly, we cannot testify,
nor make any representation or warranty, express or implied, to the accuracy, contents or data contained within this document. While
Angel Broking Limited endeavors to update on a reasonable basis the information discussed in this material, there may be regulatory,
compliance, or other reasons that prevent us from doing so.
This document is being supplied to you solely for your information, and its contents, information or data may not be reproduced,
redistributed or passed on, directly or indirectly.
Neither Angel Broking Limited, nor its directors, employees or affiliates shall be liable for any loss or damage that may arise from or in
connection with the use of this information.
Disclosure of Interest Statement AIA Engineering
1. Financial interest of research analyst or Angel or his Associate or his relative No
2. Ownership of 1% or more of the stock by research analyst or Angel or associates or relatives No
3. Served as an officer, director or employee of the company covered under Research No
4. Broking relationship with company covered under Research No
Ratings (Based on expected returns Buy (> 15%) Accumulate (5% to 15%) Neutral (-5 to 5%)
over 12 months investment period): Reduce (-5% to -15%) Sell (< -15)