Ador Welding (AWL) reported decent financial performance in Q2FY26, with slight ~4% growth YoY in revenue, on the back of improved realizations, but the volumes stayed put. The current margins are expected to be the baseline level and sustainable in the future. The ONGC Uran Flares project is expected to be completed this quarter and hence we expect no further surprises going ahead. FY27 should see the start of improved profitability reflecting only core business performance with minimal impact of the project business. Ador is gearing up to tap opportunities in the domestic capex upcycle from industries such as defense...

Mixed results, margins under pressure: FY18 full year earnings grew by a meager 3% backed by a 3.6% revenue growth coupled with an EBITDA margin expansion of 60 bps. EBITDA margin has been recorded at 7.4% along with a net profit margin of 4.0% for FY18.

Moderate revenue growth and slight improvement in profitability: FY18full year adjusted earnings grew by 8.6% mainly on account of revenue growth of 16.5% owing to improved volumes. EBITDA margin has witnessed a minor improvement (30 bps) to reach 9.7% for FY18. We expect the revenue to grow at a decent 5.5% CAGR along with an EBITDA expansion of 80 bps to reach 10.5% by FY20E.

Steady Growth, Improving Margins but Rich Valuations; We assess Q3FY18 results as disappointing due to its meager YoY growth and margin contraction. YoY revenue growth of 1.1% is negated by higher finance costs & an EBITDA contraction of 86 bps to 6.5% and the EPS de-grew by 10.6%.

Muted revenue growth, profitability to improve: We assess the Q3FY18 results to be positive. YoY EPS grew by 58% aided by mainly an EBITDA expansion of 480 bps coupled with 14.2% revenue growth. We expect the margins to grow consistently in near future reaching 12.4% EBITDA margin along with 8.9% net profit margin by FY20E. However, in view of higher valuations we retain HOLD rating with a target price of Rs. 850 with an upside potential of 7%.

Moderate growth, however improved profitability for QFY18: ESAB hasrecorded a turnover growth of 1.7% sequentially & 8.7% growth YoY for Q1FY17 owing to pressurized macro conditions and lower off-take from customer end. EBITDA, EBIT & Adj. PAT margins have recorded an expansion by 309 bps, 352 bps& 27 bps QoQ to reach 9.8%, 8.0% & 7.3% respectively.

Strategic Decisions to Lead the Way: Moderate growth recorded for Q4FY17 - ESAB has recorded a turnover growth of 8.9% sequentially & a similar 7.3% growth YoY for Q4FY17 owing topressurized macro conditions and lower off-take from customer end. EBITDA, EBIT & adjusted PAT margins have recorded a slight expansion by 84 bps, 54 bps & 128 bps QoQ to reach 6.8%, 4.5% & 7.0% respectively. Full year FY17 performance has been quite sluggish with a revenue growth of 4.5% along with EBITDA & EBIT margin contraction of 103 bps & 109 bps to reach 8.3% & 6.3% respectively

Impressive Quarter, margins under pressure though: Ador Welding (AWL)has registered a turnover growth of a massive 54.5% sequentially mainly due to low base effect resulted from demonetization during Q3FY17 & 5.1% YoY growth for Q4FY17 mainly on account of decent order book. EBITDA margin has contractedby 166 bps QoQ & 321 bps YoY for Q4FY17 to reach 6.3% owing to relatively higher operating expenses. EBIT & Net profit margins have also contracted by 68 bps &38 bps sequentially to 4.6% & 4.8% respectively in Q4FY17. Though the restoration of the repaired plants has resulted in improved production levels, demonetization seems to keep the revenue under pressure as the industrial activity remainedpressurized.

Disappointing Q3FY17 Results; Future Looks Optimistic: ESAB has recorded a turnover decline of 6.7% sequentially & a marginal 1.2% growth YoY for Q3FY17 owing to pressurized macro conditions and lower off-takefrom customer end. EBITDA, EBIT & PAT margins have also shrunk by 472 bps, 478 bps & 181 bps QoQ to reach 5.9%, 3.9% & 5.7% respectively. 9 months YTD performance has been quite optimistic with a revenue growth of 3.6% along withEBITDA margin contraction of 4 bps and EBIT & PAT margins expansion of 2 bps & 73 bps to reach 8.8%, 7.0% & 6.7% respectively compared to 9MFY16.

Improving Domestic Demand Environment Aided by GovtPolicies: Flat Quarter, margins affected due to weak growth - Ador Welding (AWL) has registered a meager turnover growth of 0.3% sequentially & 20.9% YoY growth forQ3FY17 mainly on account of decent order book. EBITDA margin has contracted by 184 bps QoQ & 263 bps YoY for Q3FY17 to reach 7.3% mainly on account of relativelyhigher expenses over revenue. EBIT & Net profit margins have also contracted by 180 bps & 66 bps sequentially to 4.8% & 4.0% in Q3FY17. Though the restorationof the repaired plants has resulted in improved production levels, demonetization seems to hit the revenue as the industrial activity remained pressurized.

Overall Positive Performance for Q2FY17, Equipments Segment Performance Back in Line: Overall positive performance for Q2FY17 - ESAB has recorded a turnovergrowth of 4.1% sequentially & 3.3% YoY growth for Q2FY17 owing to improved volumes. H1FY17 turnover has recorded a 14.1% growth compared to YoY. EBITDA margin has expanded by 80 bps QoQ and 110 bps YoY mainly due to softening ofraw material and other expenses. Also H1FY17 EBITDA margin has expanded by 30 bps YoY on the same note.

Banking on Revival in Domestic Demand Environment: Recuperating from Q1FY17 disappointment: Ador Welding (AWL) has registered a turnover growth of 31.6% sequentially & 10.9% YoY growth for Q2FY17 mainly on account of healthy order book. EBITDA margin has also expanded by 620 bps QoQ & 150 bps YoY for Q2FY17 to reach 9.1% mainly on account of stableraw material and other expenses. EBIT & Net profit margins have also expanded by 680 bps & 310 bps sequentially to 6.6% & 4.7% in Q2FY17. Positivity in results maybe related to the restoration in their plants which suffered repairs during Q1FY17 due to which production was cut down.