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Last Updated : Jun 26, 2019 01:56 PM IST | Source: Moneycontrol.com

Buy AIA Engineering; target of Rs 2050: ICICI Direct

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.

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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.


Outlook


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.


For all recommendations report, click here


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First Published on Jun 26, 2019 01:56 pm
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