AIA Engineering: BUY

AIA specializes in design, manufacture, installation and servicing of high-chrome mill internals (which find application in cement, mining and thermal power industries). The demand for AIA’s products stems primarily from the switch in the user industries’ preference to high-chrome mill internals against the conventional forged ones.

In terms of market share, both AIA and Magotteaux International of Belgium (global market leader) enjoy a dominant position worldwide. However, in the domestic market AIA is the market leader.

Management on Concall

Mr. Bhadresh K Shah
Mr. Sanjay S Majmudar

Result Highlights:

AIA Engineering Q4 (YoY)
-Net sales up 30% at Rs 264.39 crore versus Rs 203.60 crore
-OPM at 21.4% versus 23.5%
-PAT down 4% at Rs 42.53 crore versus Rs 44.08 crore

AIA Engineering FY09 (YoY)
-Net Sales up 48% at Rs 1,023.29 crore versus Rs 691.18 crore
-OPM at 24.1% versus 24%
-PAT up 30% at Rs 173.60 crore versus Rs 133.26 crore

The domestic market contributed 43% of AIA’s revenues, while the proportion of international revenues increased to 57% during the quarter against 50% of FY08 revenues.

The cement sector remains the core earnings driver with contribution of 65% to domestic revenues (95% of international revenues), while power contributed to 29% of domestic revenues and balance 6% of domestic revenues are from the mining segment.