Fundamental Result Update

Ador Welding Q2FY20 Result Update



Ador Welding reported good set of numbers in Q2FY20, mostly in line with our estimate except a miss on revenue front. Consolidated revenue for the quarter stood at Rs 1,289 mn, below our estimate of Rs 1,548 mn, registering +2.5% YoY/-0.8% QoQ growth. Consolidated EBITDA for Q2FY20 grew +7.3% YoY/+15.6% QoQ to Rs 109 mn, mostly in line with our estimate of Rs 108 mn, while EBITDA margin expanded +38bps YoY/+120bps QoQ to 8.4% beating our estimate of 7%. PAT witnessed a robust growth of +49.5% YoY/+131.9% QoQ to Rs 104 mn, which was far above our estimate of Rs 70 mn. The stupendous growth in PAT was on the back of lower effective tax rate for the quarter. Effective tax rate for the quarter stood at -13.7% as against 33.9% YoY and 41.2% QoQ. We remain positive on Ador Welding from longer term perspective, and maintain our Accumulate rating on the stock with a revised target price of Rs 374

 

Valuations: At CMP of Rs 322, AWL is trading at FY20E and FY21E, P/E multiples of 13.3x and 9.5x respectively. After factoring in good Q2FY20 results we have revised our FY20E/FY21E estimates upwards to factor in lower effective tax rate. We continue to value the stock at a target P/E of 11x its FY21E earnings, which yields a target price of Rs 374 per share. We maintain our Accumulate rating on the stock with revised target price of Rs 374, giving an upside of 16.1%.


Tags: FundamentalResult Update


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