AIA enjoys more than 95% market share for the mill internals of the domestic cement market. ~40% market share of mill internals of the global cement market excluding China
The company has expanded its capacity from 65000 TAP to 165000 TPA and has also commenced supplying mill internals for the mining industry (annual replacement demand of 2.5 MMTPA)
We maintain our earnings estimates and expect AIA to report Cons. EPS of Rs24.0 for FY10E.
At Rs.279, the stock trades at fair valuations of 2.7x book value, 11.6x earnings and 10.5x cash earnings based on FY10E.
We continue to remain positive on the long term growth prospects of the company due to strong business model with quality products, stable operating margins and expanding markets of mill internals for the mining segment.
However due to recent sharp run up in its stock price we recommend investors to look for buying opportunities at lower levels.
Thus due to recent sharp run up in stock price and limited upside potential of 8% from the current levels we are downgrading the stock of AIA from Buy to ACCUMULATE with unchanged price target of Rs300.