AIA Engineering - Riding On High-Chrome Conversion Opportunity: Prabhudas Lilladher

Prabhudas Lilladher Report

We recently visited AIA Engineering Ltd.’s plants in Ahmedabad and interacted with management. Incorporated in 1991, AIA is engaged in the development, production, installation, and servicing of mill internals used in mining, cement and thermal power generation for grinding and crushing applications.

It is one of the top two global players in high chromium grinding media, and also offers mill liners, diaphragms, blow bars, hammers, pulp lifters, etc. with total capacity of 440,000 million tonnes per annum.

The company is leading the conversion of the 2.5 mn mt global grinding media market for mining from forged to high chrome. Scope for growth is robust with ~80% of the market yet to be converted.

It also added 50,000 mt mill liner capacity in FY23 and tied up with EEMS (USA) and MPS (Australia) to improve liner efficiency, in order to become a comprehensive solution provider to mining customers.

AIA has healthy growth prospects on the back of-

1. market leadership in high chrome grinding media with robust conversion opportunity in mining,

2. comprehensive customised solution portfolio,

3. strong technical expertise, and

4. healthy margins, return profile and balance sheet.

Key monitorables include price competition, working capital, and success in mine conversion. The stock is trading at 30.2 times trailing twelve months price/earning.

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