AIA Engineering - Q2FY21 Result Update - ICICI Securities

AIA Engineering reported consolidated revenues at Rs. 742.3 crore (above our estimate of Rs. 649.9 crore), up 6.6% YoY owing to revival in economic activities in domestic, international markets. EBITDA was at Rs. 190.3 crore, up 23.5% YoY (vs our estimate of Rs. 139.7 crore). EBITDA margins expanded 350 bps YoY to 25.6% (above our estimate of 21.5%) partly due to revenue slipover of Q1 to Q2FY21. PAT was at Rs. 143.5 crore (above our estimate of Rs. 119.7 crore), declining 5.6% YoY owing to tax adjustment in base quarter, lower other income and exceptional item of Rs. 3.7 crore as impairment towards closure of its subsidiary, Welcast Steels (WSL). Other income declined 11.8% to Rs. 24.8 crore YoY.

Valuation & Outlook

Despite challenging conditions, AIA reported better than expected volume numbers in Q2FY21. However, new customer engagement and acquisition to revive as travel situation is expected to normalise in H2FY21 and will allow AIA to gain incremental volume growth in coming years. AIA's strong balance sheet, decent cash balance and efficient working capital management are expected to support long term growth. We expect overall revenues, EBITDA to grow at 5.1%, 3.3%, respectively, in FY20-22E. We believe further penetration in the mining segment and gradual volume ramp-up with repeat customers would aid medium term growth. We remain cautiously optimistic and revise our target price to Rs. 1785/ share (29x FY22E EPS). We maintain our HOLD rating.

For details, click on the link below: https://www.icicidirect.com/mailimages/IDirect_AIAEng_Q2FY21.pdf

Shares of AIA ENGINEERING LTD. was last trading in BSE at Rs.1694.05 as compared to the previous close of Rs. 1660.35. The total number of shares traded during the day was 436 in over 139 trades.

The stock hit an intraday high of Rs. 1700.95 and intraday low of 1660. The net turnover during the day was Rs. 737575.

Source : Equity Bulls

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