Shares of Ador Welding surged up over 3.5% on Friday after the company posted its results for the quarter ended June. Analysts at Nuvama said that while the company earnings were a mixed bag, the growth trajectory is on track.
The Ador Welding Analyst: The Sushil Sharma-led analyst team maintained the ‘buy’ rating on the stock with a price target of ₹1,450. The target indicates a 34.7% upside from the stock’s last closing price of ₹1,076.30.
The Ador Welding Thesis: The firm said that Ador Welding reported a YoY revenue growth of 20.1% in Q1FY24, reaching ₹190 crore, which was largely in line with expectations. As per the firm, the growth was primarily driven by strong performance in the consumables and equipment and automation segments.
However, the firm added that both gross margin and EBITDA margin came in lower than anticipated, standing at 31.5% and 8.5% respectively, compared to 33.9% and 10.3% in Q1FY23. Despite the revenue increase, the Profit After Tax (PAT) grew at a slower pace of 8% YoY, amounting to ₹11.2 crore, falling short of the estimated ₹13.8 crore.
The firm said that as a key player in the welding consumables and equipment sector, Ador holds the second-largest market share. The company’s performance was previously affected by laggard FPED (flares and processes equipment); however, in Q2FY23, it secured significant orders that began contributing to its revenue stream. The flow of revenue from these orders was slower than anticipated in Q1FY24. Despite this, the demand for consumables remains robust, and the recovery of the equipment and FPED segments is progressing as expected, the brokerage firm added.
Price Action: Ador Welding’s share price was up 4.72% to trade at ₹1,127.15 in the early hours of trading on Friday.
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