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Feb 16, 2017, 01.45 PM | Source: Moneycontrol.com

Buy AIA Engineering; target of Rs 1723: Edelweiss

Edelweiss is bullish on AIA Engineering has recommended buy rating on the stock with a target price of Rs 1723 in its research report dated February 14, 2017.

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Buy AIA Engineering; target of Rs 1723: Edelweiss

Edelweiss is bullish on AIA Engineering has recommended buy rating on the stock with a target price of Rs 1723 in its research report dated February 14, 2017.

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Edelweiss' research report on AIA Engineering

AIA Engineering’s (AIA) 20% revenue (INR 5.9bn) and 16% EBITDA (INR 1.7bn) growth surpassed our estimates by 10% and 12%, respectively. Volumes jumped 28% YoY with mining volume surging 49% (31% in Q2FY17). Gross margin dropped 335bps YoY on account of surge in ferrochrome prices. Management guided for continued strong volume growth, with incremental volume of 120,000MT over 3 years (implying volume CAGR of 20% over FY17-19E).

Outlook

Uptick in mining sector as commodity prices rise, and mere 10-12% penetration of high chrome grinding media will drive 20% volume growth (FY17-19E). We have assumed capacity utilisation of 71% in FY19E, entailing scope for further volume growth. At CMP, the stock trades at 20.6x FY19E EPS. We upgrade to ‘BUY’, based on 25x FY19E.

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Disclaimer:
The views and investment tips expressed by investment experts/broking houses/rating agencies on moneycontrol.com are their own, and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.

To read the full report click here

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Buy AIA Engineering; target of Rs 1723: Edelweiss
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