Ador Welding (AWL) is a leading player in the business of development/engineering/manufacture and sale of Welding and Cutting Products (Consumables/Equipment/Automation).
AWL is a total solutions provider offering an up-to-date suite of welding and cutting consumables, power sources and accessories besides a full package of soft skills and knowledge development for welding and fabrication excellence. AWL has also made large investments in Project Engineering Business.
March 2014 quarter sees sharp rise OPM; EO weighs PAT down
Sales for the quarter ended March 2014 grew 4% to Rs 123.23 crore. OPM jumped 210 basis points from 12.9% to 15.1% which saw OPM rising 21% to Rs 18.55 crore.
Other income fell 17% to Rs 1.04 crore. Interest cost grew 110% to Rs 61 lakh.
As deprecation fell 9% to Rs 3.20 crore, PBT went up 23% to Rs 15.78 crore.
EO loss stood at Rs 14.78 crore against nil. Thus PBT after EO slumped 92% to Rs 1 crore.
EO includes provision for diminution in value of of investments in PLT (subsidiary company) of Rs 9.27 crore and provision for standby letter of credit in favour of PLT of Rs 10.54 crore. It also includes surplus of 5.03 crore on account of sale of property.
Provision for taxation was up 52% to Rs 5.92 crore after which It registered loss of Rs 4.92 crore at the at PAT level against a profit of Rs 8.91 crore.
FY 2014 performance
In FY 2014, sales grew 1% to Rs 268.92 crore.
OPM was up from 9.9% to 10.2% which saw OP at 37.46 crore, up 3%.
Other income grew 24% to Rs 4.49 crore. Interest cost jumped 74% to Rs 1.42 crore.
As deprecation fell 3% to Rs 12.03 crore, PBT grew 7% to Rs 28.50 crore.
EO loss stood at Rs 14.78 crore against nil. Thus PBT after EO halved to 13.72 crore.
Provision for taxation was up 25% to Rs 9.49 crore. Finally, PAT fell 78% to Rs 4.23 crore.
Quarter Segment results
For the quarter, sales from the Consumables segment fell 5% to Rs 82.58 crore and accounted for 67% of sales. PBIT from the same fell 11% to Rs 9.79 crore and accounted for 53% of total.
For the quarter, sales from the Equipments & Project Engineering division soared 30% to Rs 40.65 crore and accounted for 33% of sales. PBIT from the same jumped 57% to Rs 8.56 crore and accounted for 47% of total.
PBIT Margins of Equipments & Project Engineering division jump during the quarter
For the quarter, while PBIT Margins of the Consumables segment fell from 12.6% to 11.9%, the same of Equipments & Project Engineering division rose from 17.4% to 21.1%.
FY 2014 segment results
In FY 2014, sales from the Consumables segment fell 2% to Rs 275.62 crore and accounted for 75% of sales. PBIT from the same fell 2% to Rs 30.62 crore and accounted for 75% of total.
In FY 2014, sales from the Equipments & Project Engineering division grew 14% to Rs 93.30 crore and accounted for 25% of sales. PBIT from the same jumped 33% to Rs 10.38 crore and accounted for 25 of total.
PBIT Margins were stable for FY 2014
For FY 2014, while PBIT Margins of the Consumables segment improved from 11.0% to 11.1%, the same of Equipments & Project Engineering division rose from 9.5% to 11.1%.
Outlook
Welding industry and in turn AWL will grow as investment cycle picks up in future. Welding industry caters to wide range of industrial segments such as transportation (auto and ship building), oil and gas (pipelines, platforms and rigs), fabrication of structures for power station / railways / mines / irrigation and such other basic industries. Hence pick up in industrial activity and investment cycle in any of these segments will help AWL.
Valuation
The share price trades at Rs 166.
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