AIA Engineering
BSE ID : 532683 NSE ID : AIAENG
RECOMMENDED PRICE 642.00
PEAK FROM RECO 3824.75 495.76%
CURRENT PRICE 3838.50 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.
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