Ador Welding - Rs.84.00

Ador Welding, formerly Advani Oerlikon, is a leader in the welding consumables and equipment industry catering to industries like steel, power, oil & gas, auto and infrastructure and is one of the largest exporters of welding equipments. It caters to two segments - welding and project engineering & equipment. It has presence in both electrodes and coated wires apart from welding equipment. Welding (consumables and equipment) accounts for 95 per cent of its sales. It offers automatic and manual welding equipment and products but only 20 per cent of the welding in India is automatic leaving ample scope for growth in this value-added segment.

The Government’s thrust to augment infrastructure has also translated into good order booking for the company’s customers, which in turn means more opportunities for its Welding Products. Another major area of growth comes from the Middle East. Major expansions, new plants and upgradations of existing plants in the Middle East are being announced regularly. Customisation of expertise at Ador to provide products over and above their normal requirements has enabled it to get large volume orders from select overseas customers. Hence, Ador is focusing on the export market with its value-added products to shore up revenues.

Ador has constantly strived to increase competitiveness by lowering operating costs, expanding the Sales Distribution reach of its products, benchmarking and improving on the best-of-class products and reducing wastages. The company has been continuously upgrading its IT infrastructure for reducing transaction costs and improving interactions with customers through instant accessibility. Few months back, Ador established a new manufacturing plant for Welding Consumables (Welding Electrodes) at Silvassa, a designated backward area in the Union Territory of Dadra and Nagar Haveli, with a capacity of 2500 MT per annum on a single shift basis.

On the financial front the company has a strong debt-free balance sheet. It has an impressive dividend payout ratio of more than 40 per cent of profit and in FY05 we expect it to declare 30 per cent dividend. For the fiscal ending 31st March 2005, the company could register sales and net profit of Rs. 185 cr and Rs 13.50 cr respectively. On an equity of Rs 13.60 crore and face value of Rs 10 per share, EPS works out to Rs 10. A strong buy with a price target of Rs.120 in the next 8~12 months.