Target: ₹1,151
CMP: ₹931.35
Ador Welding (AWL) reported poor financial performance in Q1 FY26, primarily impacted by write-offs pertaining to the ONGC Uran Flares project. Although the ₹27.90 crore of provision related to the ONGC project is a significant negative, we expect this to be factored in the major operating loss for the said project in FY26.
Core Welding revenue was down 4 per cent year on year and EBIT margins down 60 bps at 14.5 per cent.
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. Although some weakness is being seen in the infrastructure-led demand, we believe this would be transient in nature. Rising steel prices, demand recovery, key hires and strengthening of product portfolio augur strongly for growth prospects.
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 TP of ₹1,151 at 18x FY27 expected earnings.
Published on August 20, 2025
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