Please refer to important disclosures at the end of this report
AIA Engineering is one of the worlds 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.
CMP `1,734
52 Week High / Low
Avg. Daily Volume
Market Cap (` cr)
BSE Sensex
Face Value (`)
Reuters Code
Jaikishan Parmar
022 3935 7600 Ext: 6810
AIA Engineering Ltd
Others | Castings/Forgings
Sept 25, 2019
AIA Engineering | Castings/Forgings
Research Team Tel: 022 - 39357600 E-mail: [email protected] Website: www.angelbroking.com
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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)