Buy AIA Engineering; target of Rs 410: Firstcall Research

Firstcall Research is bullish on AIA Engineering and has recommended buy rating on the stock with a target of Rs 410 in its April 14, 2012 research report.

“AIA Engineering, incorporated as Magotteaux (India) in 1991 was a joint venture enterprise with Magotteaux International Belgium. The company is engaged in business of designing, developing, manufacturing, installing and servicing of high chromium wear, corrosion and abrasion resistant parts. These products are mainly used by cement, mining and thermal power generation industries. AIA Export was merged with the company on September 2003. The company acquired control over Vega UK in 2003, which led all Vega companies become wholly owned subsidiaries of AIA Engineering.”

“A subsidiary was set up in Canada under the name Vega Industries (Canada) Inc in 2003-04. In December 2004, company took over business of Gray Cast Foundry Works (GCFW). The same year it also acquired manufacturing Division of Centricast Enterprises. AIA's subsidiaries Vega Industries are located in the Middle East, USA, UK and Canada. The company’s UAE subsidiary has branch office in Australia and a representative office in the Philippines. The company has received ISO 9001:2000 certification for quality management. On February 2008, Paramount Centrispun Castings (PCCL) became wholly-owned subsidiary of the company. The company has clientele namely ACC, Gujarat Ambuja Cement, Kudremukh Iron Ore Company, Hindustan Zinc, Bharat Aluminium Company, thermal power plants, OEMs, etc.”

“AIA Engineering Ltd disclosed results for the quarter ended Dec 2011. Net sales for the quarter increased by 36% to Rs.3341.83 million as compared to Rs.2465.80 million during the corresponding quarter last year. During the quarter, the company has reported Net Profit increased to Rs.292.84 million from Rs.254.62 million in previous year same quarter. The Basic EPS of the company stood at Rs.3.10 for the quarter ended Dec 2011.”

“At the current market price of Rs 360, the stock is trading at 22.48 x FY12E and 18.66 x FY13E respectively. Price to Book Value of the stock is expected to be at 3.42 x and 2.89 x respectively for FY12E and FY13E. Earning per share (EPS) of the company for the earnings for FY12E and FY13E is seen at Rs.16.02 and Rs.19.29 respectively. During the quarter, the company has reported Net Profit increased to Rs.292.84 million from Rs.254.62 million in previous year same quarter. Net Sales and PAT of the company are expected to grow at a CAGR of 24% and 14% over 2010 to 2013E respectively. The Company is second largest Hi-Chrome casting producer in the World. On the basis of EV/EBITDA, the stock trades at 14.03 x for FY12E and 11.74 x for FY13E. We expect that the company will keep its growth story in the coming quarters also. We recommend ‘BUY’ in this particular scrip with a target price of Rs 410 for medium to long term investment,” says Firstcall Research report.  

Institutional holding more than 40% in Indian cos

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