AIA Engineering's Q3FY16 net profit declines 19 per cent

AIA Engineering's (AIA) reported consolidated net profit de-grew by 18.85 per cent to Rs 93.35 crore in the quarter ended 31 December 2015, as against Rs 115.04 crore in the quarter ended 31 December 2014.

The company’s topline marginally declined by 4.13 per cent to Rs 493.1 crore in Q3FY16, as against Rs 514.3 crore in Q3FY15.

Operating profit (EBITDA) marginally de-grew by 2.4 per cent to Rs 148.56 crore however EBITDA margin expanded by 53 bps to 30.13 per cent in Q3FY16 against 29.60 per cent in Q3FY15. Margin was expanded due to favourable currency and lower raw material costs.

For the first nine months of FY16, the company’s net profit grew by 8.99 per cent to Rs 289.66 crore as against Rs 318.25 crore in the same period last fiscal. Total income de-grew by 4.6 per cent to Rs 1,506.4 crore as against 1,578.8 crore in the same period of the previous year. Operating profit de-grew by 3 per cent to Rs 440 crore; however EBITDA margin expanded by 214 bps to 29.2 per cent.

In the last month, the company has started commercial production under first phase of greenfield project at GIDC, Kerala in Gujarat. The installed capacity under the first phase is 66,000 million tones (MT) per year. It also completed its brownfield expansion of 14,000 MT per year at its Trichy plant. With this expansion, the total installed capacity of wear parts of the group will be increased from 260,000 MT to 340,000 MT per year.

On valuation front, the stock is currently available at 19 times of price to earnings ratio with an earning of Rs 42.66 per share on TTM basis. Slow-down in the mining segment globally will lead to medium term pain for AIA. Today it closed at Rs 812.60 per share, marginally declining by 0.17 per cent.