AIA Engineering
AIAENG INBuyTarget ₹4,334 (Nov 2029)Price ₹3,196 (12 Nov 2026)Full analysis, 57 slides ›
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The Grind: a buy recommendation for Applied Value Investing, IIM Ahmedabad, November 2026

AIA
Engineering

The lowest-cost maker of high-chrome grinding media, trading at its cheapest multiple in ten years.

Recommendation
Buy
Price, 12 Nov 2026
₹3,196
Base-case target, Nov 2029
₹4,334
Upside to downside
3.4 to 1
Group 7: Arnav Dixit, Aryansh Kabra, Apoorva Girish Rajadhyaksha, Gautam Ganeriwala, Saurabh Khandelwal, Aditya Vijay Jain
Applied Value Investing, IIM Ahmedabad. Faculty: Prof. A. N. Seshadri.
A ball mill turning at 78% of critical speed. The green balls are high-chrome media.
Should we buy AIA Engineering at ₹3,196?

Buy. A 28%-margin franchise is priced for 7.7% growth at a ten-year-low multiple, just as its volume turns.

1 · Demand

Mines must grind more, and most still use forged steel

  • Copper ore grade down ~40% since 1991: more rock milled per tonne of copper
  • Mining uses 2 Mt of media a year, 70–75% still forged; AIA has ~8%
  • Molycop, the forged leader, is building 200 kt of high chrome
2 · Edge

The best economics in the industry

  • ₹48,700 EBITDA per tonne, 4x Molycop
  • 28% EBITDA margin vs 12–13% at Magotteaux’s parent and ME Elecmetal
  • 35% median pre-tax ROTCE; no debt; ₹4,516 Cr net cash
3 · Why now

The volume trough is behind it

  • Duties took 75–80 kt; adjusted, volume grew 4.8% a year FY21–26
  • Record ₹1,071 Cr order book; H1 FY27 mining tonnes +5.6%
  • 59% utilisation: +110 kt possible without a new plant
4 · Price

The price assumes almost none of this

  • 28.7x P/E ex cash vs a 35.9x ten-year median
  • Price implies 7.7% volume growth vs a ~10% plan
  • Street mean ₹4,160; our EPS sits below consensus
Exhibit 1 Value per share in November 2029 under each scenario, against today’s price
₹4,334
base case, Nov 2029: +36%, 11.4% a year with dividends
₹2,467
bear case (midterm sell view): −23%
₹5,640
bull case (NGDS wins at 2–3 large mines): +76%
₹4,194
probability-weighted (25/50/25): ~10% a year

Next 12 months

Freight back to 7–8% of sales (Q3 FY27); firmer FY28 volume guidance (May 2027); Ghana and China plant decision; a payout policy for ₹4,500 Cr of idle cash.

We sell if

FY28 mining volume is under 165 kt, the margin stays below 24% after freight normalises, or related-party receivables rise again in FY27.

If we are too optimistic

On the group’s strictest assumptions AIA is worth ₹3,129–3,523 in 2029: roughly today’s price. The downside is bounded.

Source: our model (model/aia_model.py), AIA ARs FY22–26, calls Jan–Nov 2026, Bloomberg ANR (12 post-Q2 notes). Price: NSE close, 12 Nov 2026.
Will demand for AIA’s products keep growing?

Mines grind more rock for the same copper, and 70–75% of the 2 Mt mining media pool is still forged steel that AIA can replace.

Exhibit 2 The mining media pool, kt a year
Exhibit 3 Copper price, US$ per tonne (LME)
Exhibit 4 Why a mine switches: high chrome against forged steel
EvidenceResult against forged
Wear-rate studies, ball mills25–30% less wear; up to 50% in corrosive circuits
AIA retrofit, 19 Mtpa copper mine, Philippines31% less media and 18% less power per tonne
Vega veteran (our interview)50–80% less wear: 650 → 300–350 g per tonne of ore
Price~US$1,900/t vs US$970/t forged: twice the price, a fraction of the wear
Where it failsSAG mills with 130–160 mm balls: high chrome cracks, forged stays

Ore grades fall

At a 1% grade a mine grinds 100 t of rock per tonne of copper; at 0.5%, 200 t. Up to half a mine’s energy goes into crushing and grinding.

Copper supply is short

The IEA sees mine supply 30% short of demand by 2035; Chile’s 2026 output is forecast −8.4%. Mines must get more out of existing mills.

Molycop confirms it

The largest forged maker, now owned by Tega, plans 10x its high-chrome capacity, to 200 kt. That proves the demand, not AIA’s share.

Cement is the base

Converted decades ago; AIA supplies 95% of Indian plants, and India adds ~35% capacity by FY31. Steady, not the growth driver.

Sources: IEA Global Critical Minerals Outlook; Cochilco (Oct 2026); LME; J. Min. Metall. 52A (2016); AIA AR FY26; JM Financial (Aug 2026); Tega calls; group interview, 12 Nov 2026.
Does AIA have a lasting edge?

AIA earns four times Molycop’s profit per tonne and the best margin among listed peers: it is the lowest-cost maker and designs liners and media as one system.

Exhibit 5 Operating margin, listed mining-consumable and equipment peers, %
Exhibit 6 EBITDA per tonne sold, ₹
Exhibit 7 Pre-tax return on tangible operating capital, %

Lowest cost

Indian scrap, labour and power. Of ₹171 revenue per kg, AIA keeps ₹49 as EBITDA. Raw materials pass through in 3–6 months.

Metallurgy

48 years of mill data and proprietary alloys. Blue-chip miners trial for a year before they buy, which keeps new entrants out.

One system

Liners, media and the NGDS discharge system are tuned together. Rivals selling only media cannot match it.

Balance sheet

No debt and ₹4,516 Cr of net cash. Tega borrowed ~₹11,700 Cr to buy Molycop, which limits how hard it can cut prices.

Sources: AIA ARs FY22–26; Bloomberg peer financials (FY26); Tega Industries filings (Molycop FY25); group recast of audited accounts (ROTCE).
Why has volume been flat, and why will that change?

Volume looked flat because import duties took 75–80 kt. Adjusted, it grew 4.8% a year, and orders and mining tonnes turned up in 2026.

Exhibit 8 Sales volume, kt: reported and with duty losses added back
Exhibit 9 Order book, ₹ Cr
Exhibit 10 Quarterly volume, kt
59%
utilisation (258 of 436 kt): room for ~110 kt more without a new plant
~60%
gross margin on each extra tonne, so profit grows faster than volume
0 duties
on the copper belt AIA targets: Chile, Peru, Ghana, Zambia, Australia
7.7% not 19%
growth the price needs, once rupee prices rise with a rupee discount rate
Sources: AIA ARs and investor presentations FY21–Q2 FY27; calls Aug and Nov 2026. Duty losses: management estimates by market. Currency point: realisation grew 5.7% a year FY22–26 as the rupee fell.
Can management deliver?

Management delivers on margins and misses on timelines. The founder owns 58.5% and is paid through dividends; capital allocation and succession are the gaps.

Exhibit 11 What management said, and what happened
SaidWhenHappenedVerdict
Margin of 24–26% as mining growsMay 2628.4% in FY26; 26.5% in H1 FY27 with freight at 10% of salesDelivered
A large media order in ChileFY26 ARUS$32.9 mn, 18 months, 3,000–3,500 t a quarterDelivered
FY27 capex ₹350–400 CrAug 26₹86 Cr in H1, ₹250 Cr planned for H2On track
5.2 lakh t capacity by Mar 2025FY23 AR4.36 lakh t; second phase cut, then droppedMissed
No major threat from trade barriersFY22 ARDuties in five countries; 75–80 kt lostMissed
China and Ghana plants in 1.5–2 yearsJan 26On hold for another quarterDelayed
Decide how to return surplus cashAug 26No decision; dividend flat at ₹16 since FY23Pending

Bhadresh K. Shah, Chairman & MD

Founded AIA in 1978; IIT-trained metallurgist. Owns 58.5%, worth ~₹17,400 Cr. FY26 pay ₹1.1 Cr with no options or bonus, against ~₹87 Cr of dividends. Kunal Shah (ED) and Sanjay Majmudar run the investor calls.

Capital allocation

₹2,643 Cr of FY22–26 cash went to the treasury, earning ~7%, over three times capex. One ₹500 Cr buyback at ₹5,000 (2024).

What we would raise

Related-party receivables up from ₹55 Cr to ₹244 Cr in FY26; chairman and MD combined since April 2026; no named successor.

Exhibit 12 Our management scorecard
Running the businessStrong

25–29% margin through raw-material spikes, Red Sea and tariffs

Delivering strategyMixed

Capacity target dropped; satellite plants deferred twice

CandourImproving

Stopped giving dates; plan labelled “not guidance”

Capital allocationMixed

Disciplined capex, no debt; too much idle cash

AlignmentGood

Promoters at 58.5% for seven years; tendered into buyback

GovernanceWatch

Combined chair and MD; related-party sales 6–7% of revenue

Sources: AIA ARs FY22–26 (remuneration, shareholding, related parties, cash flow); calls Jan–Nov 2026; Q2 FY27 presentation.
What is the price assuming?

At 28.7x earnings excluding cash, near a ten-year low, the price implies 7.7% volume growth: below management’s plan and close to the duty-adjusted history.

Exhibit 13 P/E, trailing and excluding cash, ten years
Exhibit 14 Annual volume growth FY28–36 that justifies ₹3,196
Cross-checkAIARead
EV/EBITDA, FY2620.1xPeers 6.4–16.9x; premium in line with margin
Street, 12 post-Q2 notes₹4,1608 of 14 ratings Buy; ours ₹4,334 on lower EPS
EPS FY27/28/29, ours vs street₹112/134/156Street ₹128/143/158: we are below consensus
Past troughs2020, late 2024Both re-rated when volume grew
Our exit multiple30xBelow the ten-year bottom quartile (32.6x)
Sources: NSE prices; Screener.in and AR earnings; our reverse DCF (model/aia_model.py: flat FY28–36 volume growth that sets today’s DCF equal to the price); Bloomberg peers and ANR.
What is it worth, and what if we are wrong?

Base case ₹4,334 by November 2029, 11.4% a year. The bear loses 23%, the bull gains 76%, and the strictest assumptions roughly preserve capital.

Exhibit 15 Value per share by method, bear to bull range, ₹ (green line: base case)
Exhibit 16 Scenarios
BearBaseBull
Volume growth FY28–30, a year3.5%~8%~10%
EBITDA margin25.5%28%29%
Rupee price growth3%4–4.5%4–4.5%
WACC / exit P/E12% / 21x11% / 30x10.5% / 35x
DCF value today₹1,643₹2,935₹4,018
Value, Nov 2029 / return a year₹2,467 / −7.7%₹4,334 / 11.4%₹5,640 / 21.7%
Exhibit 17 Stress test: the group’s strictest assumptions
WACC 11.5%, price growth 3%, NWC 45%, g 4%, terminal ROIC = WACCValue
DCF today₹1,895
Nov 2029 at 30x / 24x / 21x exit₹3,523 / ₹3,129 / ₹2,932
Two inputs contradict our thesis3% price growth; moat gone by FY41
Return a year at 30x / 24x / 21x+4.1% / +0.1% / −2.0%
Method: 3-year value = 50% DCF in Nov 2029 + 50% exit core P/E × FY30 NOPAT per share + FY29 cash. DCF: 10 explicit years, 5-year fade, Gordon terminal (WACC 11.0%, g 5.5%); DCF today ₹2,935. Source: model/aia_model.py and AIA_Grind_Model.xlsx.
What would prove us wrong?

The call fails only if mine conversions stall or duties reach the copper belt. Every risk has a trigger we can check each quarter.

Exhibit 18 Risks, what offsets them and what we watch
RiskTypeMitigantTrigger we watch
Trials fail and conversion stallsThesisThe base case needs no NGDS win; conversion is a year-long process by designSell if FY28 mining volume is under 165 kt
Duties reach the copper beltThesisPeru and Ghana have no local forged maker; Ghana and China plants are the hedgeAny trade case in Chile, Peru, Ghana, Zambia
Freight stays at 10% of salesEarningsContracts moving to FOB plus actual freight; normal is 7–8%Margin below 24% after freight normalises
Molycop scales high chromeEarningsConfirms demand; AIA’s cost per tonne is far lowerAIA realisation per kg against peers
Ferro-chrome and scrap spikesEarningsPrice-variation clauses, 3–6 month lagGross margin two quarters after a spike
Credit used to win shareEarningsCredit insurance in placeDebtor days above 95 for two quarters
Related-party receivablesGovernanceDisclosed and auditedSell if they rise again in FY27 (₹244 Cr now)
Founder key-person riskGovernanceKunal Shah runs strategy and investor callsA named succession plan
Metal prices fallCyclicalMedia are consumables; mines cut capex long before throughputMining tonnes milled, not metal prices

We would sell if mining volume stays flat through FY28, if the operating margin stays below 24% after freight normalises, or if management spends the cash outside the core business.

Sources: AIA ARs and calls; our model. Thesis risks break the case; earnings risks move the numbers but not the argument.
What does the trade tell us?

Two insiders confirm it: high chrome halves media use, converted customers stay, and ball mills are not going away in cement.

Ashish Trivedi, ~30 years with AIA/Vega; now mining, CIS region. 12 Nov 2026.
AIA sales team lead, cement (India); team serving plants 30+ years. Nov 2026.
Exhibit 19 How a mine converts to high chrome, about one year end to end
Marked-ball test

300–500 marked balls in the live mill

Agree baseline

Wear rate and feed; the longest negotiation

Ship trial

2–4 months from India

Purge

Replace wear until 95% converted: 3–6 months

Monitor

3–6 months against baseline

Approve

Technical, then purchasing; repeat orders

The economics

Wear falls “up to 50%, sometimes 80%”: 650 to 300–350 g per tonne of ore. Throughput and power gains come on top. That pays for AIA’s price premium.

Why customers stay

Mining: no converted mine seen going back to forged; an hour of mill downtime costs millions. Cement: “we monitor the performance, we solve the problems”; plants that leave on price come back.

The runway

~95% of CIS mines still use forged media: “we could easily double or triple our business.” Cement grows 5–7% a year; VRMs coexist with ball mills, and AIA sells VRM parts too.

Risks they named

Freight against local suppliers in some regions; mines are slow to change anything that touches production; in cement, price-led switching happens, though plants return.

50–80%
less wear than forged steel in ball mills
~1 year
from marked-ball test to regular orders
~95%
of CIS mines still on forged media
5–7%
a year cement growth, which AIA’s cement volume tracks
Sources: group interviews, Nov 2026 (transcripts). Quotes verbatim and short. Both are employees, so we use them for how the business works, not for the investment conclusion; customer interviews (JK Lakshmi, UltraTech) are being scheduled.
So, should we buy AIA?

Buy AIA Engineering at ₹3,196: a high-return franchise priced as if its growth has ended, just as it returns.

QuestionAnswerEvidence
1 · Will demand keep growing?Yes: mines grind more as grades fall; mining is 70–75% forgedCopper grade −40% since 1991; 2 Mt pool; Molycop building 200 kt high chrome
2 · Lasting edge?Yes: lowest cost, metallurgy, liners and media as one system₹48,700 EBITDA/t (4x Molycop); 28% margin; 35% median ROTCE
3 · Why now?Duties explain the flat years; orders and mining tonnes have turnedAdjusted volume +4.8% a year; order book ₹1,071 Cr; 59% utilisation
4 · Management?Trust the margins, discount the timelinesMargin and capex guidance met; founder owns 58.5%; RPT receivables to watch
5 · What does the price assume?Less growth than the business is set to deliver7.7% implied growth; 28.7x ex cash vs 35.9x median; street ₹4,160
6 · What proves us wrong?A stall in conversion or duties on the copper beltSell below 165 kt FY28 mining volume or margin under 24%
7 · What does the trade say?Two insiders confirm the saving, stickiness and runway50–80% wear saving; ~1-year conversions; leavers return
AnswerBuy
Base case, Nov 2029₹4,334 (+36%)
Bear / bull₹2,467 / ₹5,640
Upside to downside3.4 to 1
Annual return, base11.4%
Add below₹3,000
Exhibit 20 What to watch, and when
Q3 FY27 · Jan 2027

Freight back to 7–8% of sales; Chile at full run-rate

Q4 FY27 · May 2027

Firmer FY28 volume guidance

H1 FY28

Ghana and China plant decision; NGDS trial results

FY28

Board decision on returning surplus cash

FY28–29

Volume +25–30 kt a year; utilisation above 70%

All figures as of 12 Nov 2026 (NSE close ₹3,196.1). Full analysis, model detail and sources: 57-slide deck at /full.html. Prepared for a classroom exercise; not investment advice.