Sales for the quarter ended June 2015 rose 8% to Rs 80.27 crore. OPM rose 1100 basis points to 12.1% which saw OP growing from Rs 82 lakh to Rs 9.74 crore.

Other income fell 47% to Rs 67 lakh. Interest cost stayed at Rs 16 lakh.

As deprecation rose 47% to Rs 3.05 crore, PBT fell soared to rs 7.20 crore against a loss of Rs 15 lakh.

EO gain was nil against Rs 2.82 crore. Thus PBT after EO grew 170% to Rs 7.20 crore.

Provision for taxation stood at Rs 1.60 crore against Rs 8 lakh which PAT ended at Rs 5.60 crore, up 104%.

FY 2015 results

In FY 2015 sales grew 4% to Rs 384.94 crore. OPM fell 240 basis points from 10.0% to 7.6% which saw OP falling 21% to Rs 29.14 crore.

Other income fell 9% to Rs 4.59 crore. Interest cost went down 20% to Rs 1.14 crore.

As deprecation grew 3% to Rs 12.43 crore, PBT fell 29% to Rs 20.16 crore.

EO gain stood at Rs 28.00 crore against loss of Rs 14.78 crore. Thus PBT after EO grew 252% to Rs 48.27 crore.

EO for FY 2015 represents gain of Rs 2.82 crore due to sale of fixed assets and Rs 74 lakh for the devolvement of bank guarantee on the company which was issued to the subsidiary of the company.

The company had revised its policy of providing depreciation on fixed assets effective 1st April, 2014. The depreciation is now provided on Straight Line Method (SLM) based on useful life given in the Schedule II to the Companies Act, 2013 as against Written Down Value (WDV) method followed earlier. As a result of this change, the effect relating to the period prior to 1st April, 2014, is net credit of Rs 26.04 crore (excluding deferred tax) which has been shown as EO in FY 2015.

Further, based on transitional provision of Schedule II, an amount of Rs 1.08 crore (net of deferred tax) has been adjusted to retained earnings. Had the company continued with the depreciation under the old WDV method, the depreciation for FY 2015 would have been lower by Rs 12 lakh.

Provision for taxation was up 68% to Rs 15.90 crore after which PAT grew 665% to Rs 32.37 crore.

Quarter Segment results

For the quarter, sales from the Consumables segment fell 8% to Rs 52.95 crore and accounted for 66% of sales. PBIT from the same fell 13% to Rs 4.30 crore and accounted for 39% of total.

For the quarter, sales from the Equipments & Project Engineering division jumped 68% to Rs 27.32 crore and accounted for 34% of sales. PBIT from the same jumped to Rs 6.60 crore against loss of Rs 3.87 crore and accounted for 61% of total.

PBIT margin of Equipments & Project Engineering Segment soars

For the quarter, PBIT margin of Equipments & Project Engineering segment grew from -23.8% to 24.2% while that of the Consumables Segment fell from 8.6% to 8.1%.

FY 2015 Segment results

In FY 2015, sales from the Consumables segment fell 1% to Rs 271.81 crore and accounted for 71% of sales. PBIT from the same fell 20% to Rs 24.53 crore and accounted for 78% of total.

In FY 2015, sales from the Equipments & Project Engineering division grew 22% to Rs 113.13 crore and accounted for 29% of sales. PBIT from the same fell 34% to Rs 6.82 crore, accounted for 22% of total.

Capex

The Company completed CAPEX of Rs 9.33 crore and CAPEX of Rs 1.60 crore is in various stages of progress.

For FY 2015-16, the CAPEX has been budgeted at Rs12.50 crore, mainly for –

(a) Automation at Consumables and Equipment Plants.

(b) Production Equipments to balance lines for achieving capacity levels.

(c) Production related Equipment to improve "in process quality and deviation control" towards six-sigma levels.

(d) Analytical Instruments for R&D

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.

The smart economic pick-up is expected to be largely on the back of the robust manufacturing sector performance and a surge in public expenditure.

In these conditions, the company's market share strategy will be pursued aggressively for continuing its growth plan. New products developed for new applications, will enable its customers to reduce their operating costs, and will help it grow business.

Its new range of products, like CNC machines, Stainless Steel & MSGP electrodes for the Bottom of the Pyramid segment, special electrodes for Power, Process plants, Oil & Gas, Shipbuilding will help the company grow its market share. Its offering of total automation solution, especially for auto components shall open a new market opportunity.

Its investment in R&D & technical support should enable it grow as a true total solution provider for Customers, rather than a mere hardware supplier, which will act as a key strategic differentiator.

Valuation

The share price trades at Rs 295.