ICICI Direct recommended is bullish on AIA Engineering has recommended buy rating on the stock with a target price of Rs 2050 in its research report dated May 28, 2019.
ICICI Direct's research report on AIA Engineering
AIA Engineering reported revenues of Rs 887.2 crore (above our estimate of Rs 777.3 crore) registering strong growth of 19.3% YoY. EBITDA came in at Rs 191.3 crore, above our estimate of Rs 178.8 crore. However, EBITDA margins declined 70 bps YoY to 21.6% (below our estimate of 23.0%) on account of higher-than-expected increase in raw material expenses and other operating expenses. PAT was at Rs 155.9 crore (above our estimate of Rs 143.7 crore) registering growth of 3.1% YoY aided by lower tax rate during the quarter. Other income was at Rs 23.6 crore vs. estimate of Rs 45.1 crore. Effective tax rate came in at 18.1% vs. 23.9% in Q4FY18.
Strong visibility ramp up of mining segment along with focus on building in-house power capabilities to hedge power cost to help stabilise margins at current levels from FY20E onwards. We expect overall revenues and PAT to grow at a CAGR of 14.5% and 12.0%, respectively, over FY19-21E. We believe that AIA could benefit significantly from expected incremental sales volumes contribution from mining segment, technical collaboration with EEMS and recovery in non-mining segment. We revise our target price to Rs 2050/share (30x FY21E EPS) and maintain BUY rating.
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