Ador Welding - Company Update - ICICI Securities

Ador Welding (AWL) reported consolidated revenues at Rs. 139.9 crore, down 6.9% YoY, impacted by disrupted business activities across sectors. Revenue for FY20 was at Rs. 526.5 crore, up 2.6% YoY. EBITDA was at Rs. 7.6 crore, down 23.2% YoY impacted by higher other operating expenses owing to one-time provisions. EBITDA margins fell 160 bps YoY to 7.6%. However, gross margins for Q4FY20, FY20 improved 280 bps, 100 bps to ~29%, 30.4%, respectively. EBITDA margin for FY20 was at 8.2% with a marginal decline of 40 bps YoY. PAT was at Rs. 6.9 crore, down 8.8% YoY, supported by lower effective tax rate for the quarter. For FY20, PAT was at Rs. 28.7 crore, up 17.1% YoY, aided by new tax regime benefit. AWL lost ~Rs. 30-40 crore revenue in Q4FY20 due to Covid-19 lockdowns.

Valuation & Outlook

AWL has performed reasonably well in consumables business aided by gross margin improvement owing to product mix while PEB business has seen some green shoots and holds key. Debt, working capital position (increased to 90 days in FY20) will be closely watched amid economic slowdown. We value AWL on 15x FY22E EPS and arrive at a revised target price of Rs. 310. We maintain our BUY rating. Key risks: Delay in PEB execution, working capital stress.

For details, click on the link below: https://www.icicidirect.com/mailimages/IDirect_AdorWelding_CoUpdate_Jun20.pdf

Shares of ADOR WELDING LTD. was last trading in BSE at Rs.263.85 as compared to the previous close of Rs. 267.7. The total number of shares traded during the day was 2700 in over 274 trades.

The stock hit an intraday high of Rs. 266.6 and intraday low of 259. The net turnover during the day was Rs. 711048.

Source : Equity Bulls

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