Summary
AIA Engineering Limited - Q3 FY 2025-26 Earnings Call Summary Friday, January 30, 2026 4:00 PM
Event Participants
Executives 2 Kunal Shah (Director – Corporate Affairs), Sanjay Majmudar (Non-Executive, Non-Independent Director)
Analysts 6 Bhavin (SBI Mutual Fund), Devang Shah (DD Enterprise), Priyankar Biswas (JM Financial), Ravi Swaminathan (Avendus Spark), Rita Fernandes (Neo Asset Management), Varun Jain (Dolat Capital)
Financials & KPIs
| Metric | Reported | Commentary |
|---|---|---|
| Production Volume | 67,896 tons | Steady; 9-month cumulative production reached 187,000 tons. |
| Sales Volume | 64,500 tons | Flat YoY; 9-month sales volume mirrors production at ~187,000 tons. |
| Revenue (Operating) | ₹1,066 crores | Core performance consistent with the previous year’s quarter. |
| Total Income | ₹1,200 crores | Includes ₹135 crores other income; 9-month total income at ₹3,495 crores. |
| Operating EBITDA | ₹299 crores | ~28% margin; reported EBITDA of ₹425 crores (40%) includes non-operating income. |
| PAT | ₹294 crores | For Q3; 9-month PAT stood at ₹876 crores after minority interest. |
| Cash & Treasury | ₹4,200 crores | Robust liquidity; most investments are INR-denominated in India. |
| Capacity | 436,000 tons | Reduced by 24,000 tons following the closure of Welcast Steels subsidiary. |
Geographic & Segment Commentary
- Mining Segment: Mining volumes remained steady at approximately 40,000 MT per quarter. Domestic mining accounts for roughly 5,000 tons per quarter (18,000 tons 9M), while the primary growth focus remains on larger opportunities in Latin America, Australia, and Africa.
- International Markets: Management highlighted significant geopolitical uncertainty and protectionist measures (duties) globally, which have resulted in a cumulative volume loss of 75,000-80,000 tons over the last 5-7 years, now being replaced by new mine conversions.
- Specific Geographies: Announced the first chrome customer in South America; land procurement and site development are underway for a new facility in Ghana, with preliminary lab work initiated in China.
Company-Specific & Strategic Commentary
- Mill Liner Solution Strategy: Shifted focus from pure grinding media to a “package solution” (liners + media). The goal is to improve mine throughput and reduce power/cyanide consumption, targeting a 1.5-2 million ton addressable market for conversion.
- Operational Consolidation: Closed the subsidiary Welcast Steels (Bangalore), removing 24,000 tons of older, unviable capacity. Production is being consolidated at the Ahmedabad facilities to leverage better efficiencies.
- Copper Bull Run Alignment: Positioning the company to address the structural copper shortage. Management noted that as ore grades deplete, AIA’s solutions help miners maintain output without major capex by improving grinding efficiency.
Guidance & Outlook
| Metric | Guidance / Outlook | Commentary |
|---|---|---|
| Volume Growth | 25,000 - 30,000 MT | Target for FY27; management aims for “radically different” growth via solution-based conversions rather than just replacement. |
| Capital Expenditure | ₹180 crores (FY26) | ~₹105 crores spent; ₹50-55 crores expected in Q4, including ₹30 crores for solar hybrid capacity. |
| Capacity Expansion | 1.5 - 2 Year Horizon | Ghana and China facilities expected to be operational in this timeframe to serve localized markets. |
| EBITDA Margins | 24% - 25% | Long-term sustainable guidance; current higher margins (27%+) are driven by favorable product mix and controlled costs. |
Risks & Constraints
| Risk | Context |
|---|---|
| Geopolitical & Shipping | Volatility in shipping lanes (Iran/Southeast Asia) impacts container availability and leads to unpredictable shipping cost fluctuations. |
| Protectionism | Material volume losses (80k tons) due to anti-dumping duties in Brazil, Canada, and South Africa; management assumes these barriers are permanent. |
| Trial Timeframes | Mining trials for new package solutions are technically complex and prone to delays; results originally expected in Q3 have shifted to Q4 and beyond. |
Q&A Highlights
Mill Liner Trials
- Question: What is the status of the two large mine trials mentioned previously? (Varun Jain)
- Answer: Progress is positive but slow due to technical complexities. Expect results for one mine in 2-3 months and the second in 4-5 months. (Sanjay Majmudar)
Copper Market Opportunity
- Question: Is the current rally in copper/gold prices driving more demand? (Ravi Swaminathan)
- Answer: High prices don’t change the miner’s due diligence, but the structural shortage of copper (700m tons needed in 18 years) makes AIA’s throughput-improvement solution a “clear and present” necessity for miners with depleting ore grades. (Kunal Shah)
Currency Impact
- Question: How does the INR depreciation beyond ₹90/$ affect margins? (Priyankar Biswas)
- Answer: Most revenue is USD-denominated. While there is a lead-lag benefit during depreciation, AIA generally treats currency as a pass-through to maintain global competitiveness. (Kunal Shah)
Capacity Utilization
- Question: Why is capacity utilization currently low at 60-65%? (Devang Shah)
- Answer: Current focus is on value and breakthroughs in new solutions rather than just volume. If a breakthrough occurs in South America or large copper mines, modular plants in Ghana/China can be ramped up quickly to meet demand. (Sanjay Majmudar)
Key Takeaway
AIA Engineering delivered a steady Q3 FY26, characterized by flat YoY volumes but strong profitability, with a 9-month PAT of ₹876 crores. The company is undergoing a strategic pivot, moving away from selling individual consumables toward integrated “mill liner + grinding media” solutions aimed at the global copper and gold mining sectors. While protectionist duties have historically hampered volumes in Brazil and South Africa, AIA is mitigating this through localized manufacturing plans in Ghana and China and a massive ₹4,200 crore cash reserve. Management remains optimistic about the long-term structural bull run in copper, positioning AIA’s high-chrome technology as a critical tool for miners to maintain throughput as ore grades decline. Looking forward, the conversion of large-scale trials in the next two quarters remains the primary catalyst for a significant volume upcycle in FY27.
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