06 February 2015
3QFY15 Result Update | Sector: Capital Goods
AIA Engineering
BSE SENSEX
28718
Shares O/s (cr)
52-W H/L Range (INR)
1/6/12m Rel. Perf. (%)
Market Cap. (INR cr)
Market Cap. (US$ m)
NIFTY
8661
9.4
1229 / 520
-5 /27 /63
10128
1644
CMP: INR1074
YEAR
END
SALES APAT
(INRCr) (INRCr)
325
442
504
A.EPS
(INR)
34.5
46.8
53.5
EPS
Gr.(%)
54%
36%
14%
PE
TP: INR1500
P/BV EV/EBITDA
(X)
6.0
5.0
4.1
(X)
19.8
14.5
12.5
Div yld
(%)
0.6
0.7
0.7
ROE
(%)
21.0
23.8
22.4
(X)
31.2
22.9
4.1
Buy
ROCE
(%)
25.0
27.6
26.7
FY14A 2,080
FY15E
FY16E
2,219
2,456
Result Highlights
AIA Engineering results were above our estimates.
3Q Revenues were lower by 2% on account of deferment of 12% of the production got deferred for shipment. Volumes
will be accumulated and shipped together for one large client leading to a similar deferment every quarter.
A sharp drop in raw material cost due to lower commodity prices has aided margin improvement
Other income is up sharply adding to the growth at the operating level.
The company has a net cash balance sheet (INR725cr) and proposes to use part of the cash balance to add further
capacity (INR500-550cr) over next 2 years. The greenfiled project has work started and is expected to be commissioned
in phases with 1st phase of 80-90K likely ot be commisioned in 1Q/2QFY16.
QEDec-13
526.2
406.0
120.2
13
9.3
0.5
-31.1
92.2
25.8
66.4
22.9
28.0
QESep-14
572.4
424.6
147.8
20
21.8
1.1
0.0
145.0
36.8
108.2
25.8
25.4
QEDec-14
514.3
362.1
152.2
23
18.1
0.9
0.0
156.5
41.5
115.0
29.6
26.5
% y/y
-2%
-11%
27%
82%
95%
101%
N.A.
70%
61%
73%
% q/q
-10%
-15%
3%
N.A.
-17%
-16%
N.A.
8%
13%
6%
INR Cr.
Revenue
Expenditure
EBITDA
Other Income
Depreciation
Interest
EO Items
Profit before tax
Tax
RPAT
EBIDTA (%)
Tax rate (%)
Valuation and view
Our rationale for positive view on AIA Engineering is:
AIA Engineering Limited (AIA) operates in the Industrial consumables space and manufactures mill internal products used by
cement, mining and utility industries.
The mill internals industry for mining and cement is estimated at 3 million tonnes globally with a value of $5Billion. At 2.6 Lakh tonne
of capacity, AIA still has scope to improve its share of its customers’ needs.
We estimate AIA's overall volume growth during FY14-FY16E to be 11% with mining volumes rising 18%.
We expect AIA to move now in line with earnings growth of 20% CAGR over FY14-FY17E and recommend investors
to Accumulate for a revised target of INR1500 - 25xFY17E EPS.
A commodity price meltdown would impact customer earnings and is a risk for AIA Engineering as mining is a key
focus area. The company remains confident that the current commodity price fall will not impact its revenue prospects.
Ravi Shenoy
(ravi.shenoy@MotilalOswal.com); Tel: +91 22 30896865

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AIA Engineering
No
No
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