Ador Welding Ltd. (formerly Advani-Oerlikon) is one of the leading welding companies in India, manufacturing high-quality welding equipment, consumables, and welding automation solutions. Additionally, Ador has been in the Flares and Process Equipment Division for more than 30 years.
The company's shares have shown remarkable traction in 2023 so far. In the last one month alone, the shares have gained 21%. In the year-to-date (YTD) period, they have moved from ₹847.65 apiece to ₹996.50, which translates into a return of 17.56%.
Further, the shares have grown steadily from April 2020 lows of ₹188.60 apiece to the current trading price of ₹996.50, delivering a stunning return of over 428%.
During Monday's intraday trade, the stock jumped 4.51% to mark a new life-time high of ₹1,041.6. Also, it is trading 69.18% higher than its 52-week low of ₹589.
Analysts believe that the company will be one of the major beneficiaries of the current capex upcycle, and internal changes within the company have positioned it for strong growth in the future.
The company's Flares & Process Equipment division is on the mend following cleanup and has recently received a large order from ONGC.
In the recent December quarter, the company reported better-than-expected numbers, with its consolidated net profit growing by 31.25% to ₹16 crore compared to ₹11 crore for the same period last year. In the previous quarter, the company earned a net profit of ₹10 crore.
The consolidated revenue from operations in Q3 FY23 soared to ₹199 crore, a jump of 14.36% YoY from ₹174 crore in Q3 FY22.
The EPS (Earnings Per Share) improved to ₹12.03 in Q3 from ₹7.79 in the year-ago quarter.
At the prevailing price, the stock trades at a price-to-earnings multiple of 26.9x, which is much lower compared to the industry P/E of 50x.
Post the Q3FY23 earnings, domestic brokerage firm ICICI Direct Research has kept its 'buy' rating on the stock with a target price of ₹1,055 apiece.
The brokerage said the company aims to focus on its core welding business, reduce legacy costs while streamlining projects business to regain growth and improve profitability.
Additionally, the domestic welding and automation business will emphasize improving margins and product offerings, reducing costs, and optimizing the product mix, it added.
Overall, the brokerage firm anticipates revenue and EBITDA to grow at a CAGR of 17.8% and 22.7%, respectively in FY23–25E, with margins expected to rebound to 10.2% levels.
According to data from Trendlyne, ace investor Ashish Kacholia holds 595,400 equity shares in Ador Welding. This translates to a 4.38% stake in the company. He is often referred to as a "Big Whale" in the Indian stock market due to his reputation for making successful investments in various companies.
Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of MintGenie.
