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Centrum Wealth
AIA Engg (Hold)
CMP: ₹1000.30
Target: ₹1,156
AIA Engineering Ltd (AIAE), on a consolidated basis, for Q4FY2015 reported weak numbers which were on expected lines. Revenue grew at 5 per cent y-o-y to ₹605 crore, due to a sluggish growth in volumes and net realisations. During the quarter, AIAE’s volume grew by 2 per cent y-o-y to 50,000 tonnes, whereas net realisations grew by just 1 per cent y-o-y to ₹117,454 a tonne. Due to the pressure in the commodity sector, the miners resorted to destocking which impacted the overall demand for AIAE. For FY2015, AIAE’s volume grew by 6 per cent y-o-y to 1.87 lakh tonnes, which was below the guided level of 1.90 lakh tonnes. Falling commodity prices and inventory optimisation are expected to restrict AIAE’s volume growth over the next 2 quarters. We believe the stock could remain range bound in the near term. We suggest that investors who have bought the stock at lower levels can look to book profits. Alternatively, investors with long-term horizon and have patience can ‘Hold’ the stock as we expect business growth to pick up from FY2017E. Also, the stock may witness buying interest intermittently.
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