CD Equisearch

AIA Engg (Accumulate)

Target: ₹2,089

CMP: ₹1,855

AIA Engineering is engaged in designing, development and manufacturing of grinding media, liners, diaphragms and vertical mill parts which find application in grinding and crushing operations in mining, cement and thermal power generation.

With easing of some travel restrictions and lifting of consumer sentiment, AIA Engineering saw improvement in volumes which grew by 14.5 per cent to 69,064 tonnes in Q2 when compared to 60,318 tonnes in Q1; though y-o-y growth flat lined (growth a shade under 1 per cent).

Mining business accounted for much of this rise (up +30.7 per cent) while other businesses slackened. Propelled by price hikes, accentuated by high raw material prices, revenues grew by 19.2 per cent to ₹885.17 crore in Q2 compared to ₹742.32 crore in the same quarter a year ago. AIA’s continuous efforts to tap higher market share in high chrome grinding solutions through process & design improvements, investment in new alloys and automation would lend no small competitive advantage, partially reflected in increased pricing power. AIA’s annual mining volumes have grown a shade under 10 per cent in four years ending FY21. Yet business scaling has been impeded by Covid-19 travel restrictions and scarcely faster migration to high chrome grinding solutions.

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