Hold AIA Engineering; target of Rs 1328: Centrum

Centrum's research report on AIA Engineering

AIA Engineering Ltd (AIAE), on a consolidated basis, for Q2FY18 reported weak numbers. Higher raw material prices, currency volatility and pricing strategy to acquire new clients led to margin contraction by 1,001bps YoY to 20.1%. Revenue grew by ~6% to Rs559 crore, on the back of volume growth of 5% to 54,573 tonne. Net profit declined by 23% to Rs87 crore. Net realisations stood at Rs99,489 per tonne (up 0.4% YoY, down 0.2% QoQ), impacted by new client additions and change in product mix. At present AIAE’s net cash position stands at Rs1,119 crore.

Outlook
We maintain our Hold rating and anticipate better capacity utilization from FY19/20 onwards.

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