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INVESTMENT INSIGHTS

Check Before You Invest : Aaron Industries Ltd

BSE: 0 NSE: AARON ISIN: INE721Z01010
  |   Sector:  Capital Goods & Industrial Consumables   |   Industry:  Engineering - Industrial Equipments

Snapshot

Q.1 Which industry/sub-sector does Aaron Industries Ltd belong to?
Aaron Industries Ltd belongs to the Capital Goods & Industrial Consumables sector, operating specifically within the Engineering - Industrial Equipments segment.
Q.2 Is Aaron Industries Ltd a good quality company?
Aaron Industries Ltd is a average quality company, based on a somewhat consistent multi-year financial track record.

This assessment is based on company’s performance on Revenue growth, ROCE, Equity and Assets, key margin ratios, cash conversion cycle, and debt to cash flow from operations and how it compares with its long term averages.

Q.3 Is Aaron Industries Ltd undervalued or overvalued?
Aaron Industries Ltd appears Undervalued, as its key valuation ratios are lower than their past averages.

Based on the industry it operates in, the relevant valuation ratios include one of the following, P/E, P/BV, P/Sales, EV/EBITDA or a combination of two or more.

Valuation Ratios Current 5-year
Historic Median
Price to Earnings 37.11 44.01
Price to Book 5.19 8.54
Price to Sales 2.74 4.33
EV to EBITDA 15.48 26.05
Q.4 Is Aaron Industries Ltd a good buy now?
Aaron Industries Ltd is not a good buy now, based on weak price trend analysis suggesting prices may fall. However, you need to check its quality and valuation before making a decision

Performance Analysis

We have analysed the performance of the company on the following:

  • How has it performed on generating Profits?

    By checking its Revenue growth, Gross, Operating and Net Margins compared to its last 5-year median.

  • How efficiently has it utilized Capital?

    By checking its ROCE, ROA, ROE and its Cash Conversion Cycle.

  • How is it managing its Debt?

    By checking its Debt to Equity and Cash Flow from Operations.

A: What are the trends in revenue and profit margins?

Q.1 Revenue growth of Aaron Industries Ltd?
Aaron Industries Ltd revenue growth is 23.3% for FY-2025, which is below its 5-year CAGR of 29.5%, indicating slower growth.

Q.2 Gross Profit margin of Aaron Industries Ltd?
Aaron Industries Ltd Gross profit margin which is the profit after deduction of direct costs, is 17.5% for FY-2025, which is above its 5-year median of 15.4%, indicating increasing margins.

Q.3 Operating Profit Margin of Aaron Industries Ltd?
Aaron Industries Ltd Operating Profit Margin which is the profit after deduction of all operating costs, is 19.09% for FY-2025, which is above its 5-year median of 17.15% indicating increasing margins.

Q.4 Net Profit Margin of Aaron Industries Ltd?
Aaron Industries Ltd Net Profit Margin is 10.58% for FY-2025, is above its 5-year median of 9.83%, indicating increasing margins.
Current Level 5-year
Historic Median
Gross Profit Margin (%) 17.5 15.4
Operating Profit Margin (%) 19.09 17.15
Net Profit Margin (%) 10.58 9.83

B: Does the business utilize capital efficiently?

Q.5 Return on Asset of Aaron Industries Ltd?
Aaron Industries Ltd Return on Asset is 10.19%, which is below its 5-year historical median of 10.83%, indicating deteriorated asset utilization efficiency.

Q.6 Return on capital employed (ROCE) of Aaron Industries Ltd?
Aaron Industries Ltd Return on capital employed is 18.59% for FY-2025, which is below its 5-year historical median of 19.83%. The current ROCE is above its estimated weighted average cost of capital (WACC) of 14%, indicating value creation.

Q.7 Return on Equity (ROE) of Aaron Industries Ltd?
Aaron Industries Ltd Return on equity is 20.9% for FY-2025, which is below its 5-year historical median of 22.48%, indicating the business is making worse use of its shareholders capital.

Q.8 Cash conversion cycle of Aaron Industries Ltd?
Aaron Industries Ltd Cash conversion cycle is 80 days, in line with its 5-year historical median of 80 days, indicating stable working capital management. However, you need to compare this with its peers in the industry.
Current Level 5-year
Historic Median
Asset Turnover (x) 0.96 1.21
ROE (%) 20.9 22.48
ROCE (%) 18.59 19.83
Cash Conversion Cycle 80 days 80 days

C: How much debt does the business have and is it at a sustainable level?

Q.9 Debt to Equity ratio of Aaron Industries Ltd?
Aaron Industries Ltd Debt-to-Equity ratio is 0.74, which is above the industry average of 0.18, indicating higher debt levels in the industry.

Q.10 Debt to cash flow from operations of Aaron Industries Ltd?
Aaron Industries Ltd Debt to cash flow from operations is 3.69, which is at a unhealthy level.

Ownership & governance

D: Promoter shareholding and pledge status of Aaron Industries Ltd?

Q.1 Promoter shareholding and pledge status of Aaron Industries Ltd?
Promoters hold 73.07% of the Aaron Industries Ltd, with 0.00% of their stake pledged, indicating no pledge risk.

Peer comparison (industry-wise, mcap)

E: How does Aaron Industries Ltd performance compare with that of its Peers?

Q.1 Revenue growth of Aaron Industries Ltd vs industry peers?
Aaron Industries Ltd revenue CAGR is 29.50%, compared to the industry median CAGR of 3.04%, indicating faster growth and gaining its market share.
Profit Metrics
Current Level 5-year
Industry Median
Revenue Growth (%) 23.3 3
Gross Profit Growth (%) 40 23.6
Operating Profit Growth (%) 36.4 21.7
Net Profit Growth (%) 33.3 27.1
Operating Efficiency
Current Level 5-year
Industry Median
Asset Turnover (x) 0.96 0.89
ROE (%) 20.9 12.09
ROCE (%) 18.59 14.64
Cash Conversion Cycle (days) 79.93 98

Valuation & price assessment

Q.1 Stock return of Aaron Industries Ltd over the last decade?
Over the last 5 year(s), the stock has delivered a CAGR of 4.6% based on the current price.
9Y 5Y 3Y 1Y
Share Price
CAGR		 - 4.6% -17.8% -70.4%
Q.2 Valuation ratios of Aaron Industries Ltd vs historical?
The current P/E ratio of 37.11 is lower than its historical median of 44.01, indicating that the stock is trading below its historical average valuation.
Q.3 How do the current valuation ratios compare with 5-year historical median and industry numbers?
Valuation Ratios Current 5-year
Historic Median		 5-year
Industry Median
Price to Earnings 37.11 44.01 29.36
Price to Book 5.19 8.54 2.91
Price to Sales 2.74 4.33 2.93
EV to EBITDA 15.48 26.05 15.77

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