Comments
AIA Engg (Reduce)
CMP: ₹1,275
Target: ₹1,102
AIA Engineer’s order book as on October 1, 201 per cent6, stood at ₹844 crore. In light of the company already clocking the revenues worth ₹1,008.34 crore in the first half of this fiscal, we expect the revenues for the entire fiscal to be ₹2,169.68 crore. Abetted by newer markets and increased capacity we expect a 16.2 per cent growth in revenues for FY18 — ₹2,521.79 crore. This growth is assisted by a 13.9 per cent growth in volumes, which will stand at 2,42377 million tonne. The OPMs are expected to hover north of 28 per cent in the current fiscal, whereas NPMs for the next couple of years may cross 20 per cent.
The stock presently trades at 25.8x FY17e EPS of ₹50.01 and 23.5x FY18e EPS of ₹55.11. High margins becoming the new normal and the company’s planned capex and aggressive expansion into newer markets together with consolidation of its customer base can lay a strong business, if successfully implemented. The growth trajectory of the company was broken in FY16 when it reported a negative growth in revenues (minus 3.9 per cent) for the first time in six years. Since the global mining sector is yet to come out of woods, it is unsafe to assume that the worse is over. We, therefore, maintain our previous rating of “reduce” on the stock with a revised target of ₹1,102 (previous target ₹917) – to factor in 10 per cent increase in FY18 earnings — based on 20x FY18e earnings (peg ratio: 1.9) over a period of 6-9 months.
Comments
Comments
Comments have to be in English, and in full sentences. They cannot be abusive or personal. Please abide by our community guidelines for posting your comments.
We have migrated to a new commenting platform. If you are already a registered user of TheHindu Businessline and logged in, you may continue to engage with our articles. If you do not have an account please register and login to post comments. Users can access their older comments by logging into their accounts on Vuukle.