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Multi Baggers

Hem Securities

5.30 AM Jan 1st 1970

AIA Engineering

BSE ID : 532683     NSE ID : AIAENG

RECOMMENDED PRICE 642.00

PEAK FROM RECO 3824.75 495.76%

CURRENT PRICE 3791.00 Resource id #17

AIA Engineering manufactures and markets a wide range of High Chromium consumable wear parts. We initiate a 'BUY' on the stock with a target price of Rs 770 with the medium to long term investment horizon.

AIA Engineering 
 
AIA Engineering manufactures and markets a wide range of High Chromium consumable wear parts (mill internals) which are used in the process of Crushing/Grinding in the Cement, Mining, Thermal power and Aggregate Industries.

The company has registered robust results for the quarter ending December 2013. The revenues from operations grew by ~27 percent to Rs.526.22 crores vs. Rs.415.99 cr. in the corresponding quarter last year. Operating profit climbed sharply by 45.40 percent at about Rs.120.25 crores as against Rs.82.70 crores in the previous year quarter. The adjusted net profit skyrocketed at Rs.97.50 crore for the quarter as compared to Rs.53.10 crore (pre-exceptional). EPS for the quarter stood at Rs.10.37.

For the nine months ended December 2013, the company did about 1,30,000 tons of tonnages and expects to do about 44,000-45,000 tons in the last quarter totaling about 172000-174000 tons for the full year.

AIA Engineering has entered into settlement agreement with Magotteaux International (MI) Belgium, to avoid uncertainty of the outcome of further litigation and legal and other expense including of the current ongoing litigation and to resolve the dispute amicably and avoid further damages and litigation costs. The Company has paid $6.00 million on December 16, 2013 to MI in consideration of the dismissal of the litigation and mutual release from claims among the parties.

Valuation

With strong capacity expansion plans; commissioning of Brownfield facility, entry in new segment, new customers; leadership position and low-cost advantage; AIA Engineering Ltd. growth prospects and profitability looks attractive. We believe the company is trading at an attractive valuation at 21.28x and 18.31x of FY14EPS of Rs.30.17 and FY15EPS of Rs.35.07. We initiate a 'BUY' on the stock with a target price of Rs.770 (appreciation of about 20 percent) with the medium to long term investment horizon.

For full details, Click on the attachment.

Disclaimer & Disclosure: This document is prepared for our clients only, on the basis of publicly available information and other sources believed to be reliable. Whilst we are not soliciting any action based on this information, all care has been taken to ensure that the facts are accurate, fair and reasonable. This information is not intended as an offer or solicitation for the purchase or sell of any financial instrument and at any point should not be considered as an investment advise. Reader is requested to rely on his own decision and may take independent professional advise before investing. Hem Securities Limited, Hem Finlease Private Limited, Hem Multi Commodities Pvt. Limited, Directors and any of its employees shall not be responsible for the content. The person accessing this information specifically agrees to exempt Hem Securities Limited, Hem Finlease Private Limited, Hem Multi Commodities Pvt. Limited or any of its affiliates or employees from, any and all responsibility/liability arising from such misuse and further agrees to hold Hem Securities Limited, Hem Finlease Private Limited, Hem Multi Commodities Pvt. Limited or any of its affiliates or employees free and harmless from all losses, costs, damages, expenses that may be suffered by the person accessing this information due to any errors and delays. The companies and its affiliates, officers, directors, and employees, including persons involved in the preparation or issuance of this material may from time to time, have long or short positions in, and buy or sell the securities there of, company (ies) mentioned here in and the same have acted upon or used the information prior to, or immediately following the publication. Analyst Certification: The views expressed in this research report accurately reflect the personal views of the analyst(s) about the subject securities or issues, and no part of the compensation of the research analyst(s) was, is, or will be directly or indirectly related to the specific recommendations and views expressed by research analyst(s) in this report.

AIA Engg_HemSec_Multibagger.pdf

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