AIA Engineering - Result Update - ICICI Securities

AIA Engineering reported consolidated revenues at Rs. 856.9 crore (above our estimate of Rs. 639.2 crore) down marginally by 3.4% YoY despite economic challenges. EBITDA was at Rs. 184.7 crore, down 3.1% YoY (vs. our estimate of Rs. 147 crore). EBITDA margins improved marginally by 10 bps YoY to 21.6% (below our estimate of 23%) due to marginal decline in gross margin YoY. Hence, it was at Rs. 142.4 crore (above our estimate of Rs. 120.5 crore), down 8.3% YoY, impacted by 18.5% YoY increase in depreciation to Rs. 26.9 crore. Other income grew 23.7%, YoY to Rs. 29.2 crore.

Valuation & Outlook

Despite challenging conditions, AIA reported decent volume growth in Q4FY20. Concerns remain on how fast developmental customers can return for AIA to gain incremental volume growth in coming years. However, AIA's strong balance sheet, decent cash balance and efficient working capital management would support long term growth. We expect overall revenues to grow at 3.7% CAGR with EBITDA growing at 0.3% CAGR in FY20-22E, despite challenging conditions. We believe that penetration in the mining segment and volume ramp-up with repeat and loyal customers would aid growth in the medium term. We remain cautiously optimistic and revise our target price to Rs. 1705/ share (29x FY22E EPS). We maintain HOLD rating.

For details, click on the link below: https://www.icicidirect.com/mailimages/IDirect_AIAEng_Q4FY20.pdf

Shares of AIA ENGINEERING LTD. was last trading in BSE at Rs.1604.7 as compared to the previous close of Rs. 1590.75. The total number of shares traded during the day was 2223 in over 628 trades.

The stock hit an intraday high of Rs. 1624.1 and intraday low of 1585. The net turnover during the day was Rs. 3577405.

Source : Equity Bulls

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