Core Welding revenue was down by 4% YoY and Ebit margins down by 60 bps YoY at 14.5%. However, we expect a steady recovery from here on with the demand situation improving in key areas such as Nuclear, Thermal, Defense and General Engineering.
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IDBI Capital Report
Ador Welding Ltd. reported poor financial performance in Q1 FY26 primarily impacted by write offs pertaining to the ONGC Uran Flares Project. Although the Rs 279 million of provision related to the ONGC project is a significant negative, we expect this to factor in the major operating loss for the said project in FY26.
We fine tune our estimates downwards to factor in the same. FY27 should see the start of improved profitability reflecting only core business performance without any impact of the project business.
Valuations at 14xFY27 expected earnings are attractive and we believe the company is gearing up to tap the opportunities in the domestic capex upcycle.
The management has also strengthened the top management team with key hires which bodes well from a long term strategic perspective.
We maintain our Buy rating on Ador Welding with revised target price of Rs 1,151 at 18x FY27 expected earnings.
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