Hold AIA Engineering; target of Rs 1588: Centrum

Centrum's research report on AIA Engineering

AIA Engineering (AIAE), for Q3FY18 on a consolidated basis, continued to witness EBITDA margin pressure on account of higher raw material prices (Scrap prices were higher although ferro chrome prices were stable QoQ), currency volatility and pricing strategy to acquire new clients. EBITDA margins contracted by 712bps YoY to 22.2%. Sales volume for the quarter declined by 9% to 51,392 tonne

Outlook

We retain our view that near term EBITDA margin pressure could persist owing to pricing strategy in new markets and increase in raw material costs, thereby impacting profitability. We maintain our Hold rating and anticipate better capacity utilization from FY19/20 onwards. For all recommendations report, click here

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