Hold AIA Engineering; target of Rs 1785: ICICI Direct

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ICICI Direct's research report on AIA Engineering

AIA Engineering reported consolidated revenues at Rs 742.3 crore (above our estimate of Rs 649.9 crore), up 6.6% YoY owing to revival in economic activities in domestic, international markets. EBITDA was at Rs 190.3 crore, up 23.5% YoY (vs our estimate of Rs 139.7 crore). EBITDA margins expanded 350 bps YoY to 25.6% (above our estimate of 21.5%) partly due to revenue slipover of Q1 to Q2FY21. PAT was at Rs 143.5 crore (above our estimate of Rs 119.7 crore), declining 5.6% YoY owing to tax adjustment in base quarter, lower other income and exceptional item of Rs 3.7 crore as impairment towards closure of its subsidiary, Welcast Steels (WSL). Other income declined 11.8% to Rs 24.8 crore YoY.

Outlook

We believe further penetration in the mining segment and gradual volume ramp-up with repeat customers would aid medium term growth. We remain cautiously optimistic and revise our target price to Rs 1785/ share (29x FY22E EPS). We maintain our HOLD rating.

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