Company Profile:

AIA was incorporated in 1978, as Ahmedabad Induction Alloys Pvt Ltd, by the promoter, Mr. Bhadresh Shah. Established almost three decades back, AIA Engineering has now emerged as the world’s second-largest and India’s largest producer of value-added high chrome mill internals (HCMI). Put differently, the company specializes in designing, developing, and manufacturing of products such as grinding media, liners, diaphragms, and vertical mill parts (collectively referred to as mill internals). Its products find application in grinding and crushing operations in mining, cement, and thermal power generation. Having a local presence in strategic locations either through subsidiaries or representative offices across the globe has helped it tap customers in more than 120 nations worldwide.


AIA largely caters to mining, cement, power, and aggregates for their grinding and crushing solutions.

  • Mining – Its offerings in this segment are classified into tube mill internals and rod mill internals. Most prominent products in tube mill internals include grinding media, inlet/outlet headliners, shell liners, and diaphragms.
  • Cement – The products in this segment are grinding media, Grinding rolls, shell liners, diaphragms, crusher parts, and HRCS Casting.
  • Power – AIA Group manufactures tube mill internals (grinding media; shell liners) for the power sector. Its wear parts increase mill efficiency in the power sector. Other products in this power segment include grinding elements for vertical mills and high-performance milling systems (HPMS).


  • The Company has 11 subsidiary companies (including step-down subsidiaries) as of 31 March 2021.

Key Rationale:

  • Healthy market position with diversified revenue base – The AIA group has a strong market position in the high-chrome mill parts and components market globally, driven by superior technology, presence across key segments, efficient aftersales services, and longstanding client relationships in all end-user segments. The revenue mix benefits from diversity across end-user segments and geographical reach. AIA sells mill parts and components to the cement, mining, and power industries. Further, within the mining segment, the company services ores of different minerals such as iron, copper, gold, and platinum across various geographies.
  • CBSA Update – The Canada Borders Service Agency (CBSA) has initiated an investigation in December 2020 with respect to alleged dumping and subsidizing of certain media grinding from India being the subject matter. AIA has 25000 MT annual sale exposure to Canada. The company said that on August 27, 2021, the Canadian International Trade Tribunal (CITT) has made its determination in favor of the domestic industry in Canada. However, CITT has excluded the supply of the subject goods to Cement Industry from the aforesaid finding and conclusion and hence, the proposed final duty of 22.00% will not apply to Grinding Media supplied to the Cement Industry (The Company made sales of 1353Metric Tonnes to Cement industry in Canada in FY2021).
  • Expansion – AIA has done CAPEX of Rs.55crs in Q1FY22 and is likely to do ~Rs.200crs Capex in FY22E. The majority includes payables towards mill liners Capex, the addition of a 5.4 MW wind turbine, and general CAPEX. Mill lining capacity addition of 50000 MT is likely to be completed in Q4FY22E. While the company has paused grinding media capacity addition (~50000 tonnes) CAPEX as of now. The entire CAPEX is to be funded via existing cash surplus and internal accrual. Given the sizeable market potential of high-chrome grinding media for mining globally, increased capacities will enable AIA to scale up further and strengthen its market presence.
  • Financial Performance – AIA reported consolidated revenues at Rs.734.9crs in Q1FY22, up 27.5% YoY owing to reasonable growth of 13.4% in volumes on a YoY basis. The realization grew 14.7% to Rs.121.1 per kg YoY, aided by forex gains and product mix. EBITDA margins improved 190 bps YoY to 23.2%. Sales volume came in reasonable at 60318 MT in Q1FY22, up 13.4% YoY. Mining segment volumes were down 10% to 36967 MT while cement & other segment volumes almost doubled to 23351 MT YoY amid a low base. In Q1FY22, gross margin expanded 110 bps YoY to 61.7% YoY, aided by product mix and pass-through amid higher commodity prices. The order book of the company was at Rs.682crs as of Q1FY22 (vs. Rs.632crs as of Q4FY21). The overall working capital situation is quite stable and likely to hover around 110-120 days in the medium term.

Industry Analysis:

The rise in infrastructure development and automotive production are driving growth in the metals and mining sector in India. India has a vast mineral potential with mining leases granted for a longer duration of 50 years. As of FY21, the number of reporting mines in India was estimated at 1,229, of which reporting mines for metallic minerals were estimated at 545 and non-metallic minerals at 684. GVA from mining and quarrying stood at US$ 39.72 billion in FY21. India is the second-largest cement producer in the world and accounted for over 7% of the global installed capacity. India’s overall cement production capacity was nearly 545 million tonnes (MT) in FY20. Of the total capacity, 98% lies with the private sector and the rest with the public sector. The top 20 companies account for around 70% of the total cement production in India. The demand of the cement industry is expected to reach 550-600 MT per annum (MTPA) by 2025 because of the expanding demand of different sectors, i.e., housing, commercial construction, and industrial construction.

Growth Drivers:

The Government of India has allocated Rs. 111 lakh CRS (US$ 1.4 trillion) under the National Infrastructure Pipeline (NIP) for FY2019-25. Sectors such as energy (24%), roads (18%), urban (17%), and railways (12%) account for ~71% of the projected infrastructure investments in the country. To boost the recycling of copper in India, the government announced a reduction of import duty on copper scrap from 5% to 2.5% in the Union Budget 2021. According to the data released by the Department for Promotion of Industry and Internal Trade (DPIIT), cement and gypsum products attracted Foreign Direct Investment (FDI) worth US$ 5.87 billion between April 2000 and March 2021.

Peer Analysis:

Competitors: Bharat Forge, MM Forgings, etc. No listed peer is a direct competitor in manufacturing casting materials to the mining and cement sector. Bharat-Forge and MM forgings are two forging companies that are quite similar to AIA for comparison and the former two cater to Automobile and other allied industries.


AIA Engineering Ltd products find application in grinding and crushing operations in mining, cement, and thermal power generation. Despite challenging conditions, AIA reported reasonable volumes in Q4FY21. However, new customer engagement and acquisition are expected to pick up as the travel situation is expected to normalize in H2FY22E and will allow AIA to gain incremental volume growth in the coming years. AIA’s strong balance sheet, decent cash balance, and efficient working capital management are expected to support long-term growth. Hence, we recommend a BUY rating in the stock with the target price (TP) of Rs.2200, 32x FY22E EPS.