At a Glance
Aeron Composites Ltd, a ₹218 Cr SME star, is quietly pultruding its way into India’s infrastructure boom with FRP products for handrails, gratings, and cable trays. With 35% profit CAGR and decent ROCE, it’s expanding into CFRP and rebars — but working capital cycles and cash flows are wobbling harder than a beginner doing yoga on a fiberglass mat.
1. 🧨 Introduction with Hook
If you thought industrial plastics were boring, Aeron Composites is here to prove you wrong — not with fireworks, but with a silent 7x revenue journey over 7 years, one cable tray at a time.
Born in 2011 and now worth ₹218 Cr, Aeron is grinding out Fiber Reinforced Polymer (FRP) products like it’s the next Asian Paints for engineers. But is this SME gem too fragile under the surface? Or is it a compounder disguised in a polymer suit?
2. 🏭 Business Model – WTF Do They Even Do?
- Aeron makes FRP products: Pultruded rods, gratings, cable trays, poles, and structural profiles.
- Offers E2E solutions: Design → Prototype → Manufacturing → Logistics → Installation.
- Clients include infra, railways, industrial automation, and green energy sectors.
- Recently entering CFRP (Carbon Fiber Reinforced Polymer) and FRP rebars for civil infra.
Basically: If it’s strong, light, and non-rusty — Aeron wants to make it.
3. 📈 Financials Overview – Profit, Margins, ROE, Growth
| Metric | FY23 | FY24 | FY25 |
|---|---|---|---|
| Revenue (₹ Cr) | 179 | 200 | 215 |
| PAT (₹ Cr) | 7 | 10 | 13 |
| OPM | 6% | 8% | 8% |
| ROE | 25% (3Y avg) | 20% | 19.6% |
| EPS (₹) | 42.2 | 64.5 | 7.84* (split adjusted) |
🔥 5-Year CAGR:
- Revenue: 23%
- PAT: 35%
- ROE: Strong and consistent
⚠️ BUT:
- Q4FY25 margins fell to 8% (down from 10% in Sep 2023)
- Cash flow from ops: -₹9 Cr in FY25
4. 📊 Valuation – Is It Cheap, Meh, or Crack?
- CMP: ₹128
- P/E (TTM): 16.3x
- Book Value: ₹59.3 → P/B: 2.16x
- EV/EBITDA: ~13.5x (est.)
👑 Fair Value Range:
Let’s assume normalized PAT grows 25% for 2 years, then 15% for 3 more years, and assign a P/E band of 18–22x on FY27E PAT.
- FY27E PAT = ~₹23 Cr
- Fair MCap Range = ₹414–₹506 Cr
- Per Share FV (post-split): ₹243–₹297
🚦 Verdict: Still below FV zone, but entry timing needs patience.
5. 🍲 What’s Cooking – News, Triggers, Drama
- 🏗️ CFRP Capex announced – expansion into carbon fiber rebars for infra/metro.
- 🧪 New product line: FRP Rebars – low-weight, corrosion-resistant steel alternative.
- 🧢 SME investors’ favourite — post-split retail push + mutual fund tracking.
- 📢 June 2025 Investor Meet held in Mumbai: sign of ambition
6. 💣 Balance Sheet – How Much Debt, How Many Dreams?
| FY25 Snapshot | ₹ Cr |
|---|---|
| Equity Capital | 17 |
| Reserves | 84 |
| Borrowings | 45 |
| Total Liabilities | 206 |
| CWIP (Capex in progress) | 35 |
| Fixed Assets | 20 |
⚠️ Debt doubled in FY25. But it’s mostly to fund expansion — not survival.
🧮 Debt-to-Equity: 0.5x — acceptable if growth follows through.
7. 💵 Cash Flow – Sab Number Game Hai
| Year | CFO (₹ Cr) | FCF (Est.) |
|---|---|---|
| FY24 | +21 | ~10 |
| FY25 | -9 | -43 (high CWIP) |
👻 Red flag in FY25? Operating cash turned negative despite 8% OPM. Working capital stretch or poor collections?
8. 🧮 Ratios – Sexy or Stressy?
| Ratio | Value |
|---|---|
| ROCE (FY25) | 21.2% |
| ROE (FY25) | 19.6% |
| Inventory Days | 159 (👀) |
| Debtor Days | 77 |
| Cash Conversion Cycle | 83 days |
🧠 Inventory bloating is not cool, especially for a fast-moving infra-linked business. Need to monitor.
9. 💸 P&L Breakdown – Show Me the Money
- Revenue up 20% YoY (FY24 → FY25)
- OPM stable at 8%
- EPS (pre-split) at ₹64.5 → Post-split ~₹7.8
- Quarterly Profit: ₹6.69 Cr in Mar 2025
📉 But quarterly sales down QoQ: ₹107 Cr vs ₹108 Cr (flat growth)
10. ⚔️ Peer Comparison – Who Else in the Game?
| Company | CMP | P/E | ROCE | OPM | MCap |
|---|---|---|---|---|---|
| Aeron | ₹128 | 16.3x | 21.2% | 8% | ₹218 Cr |
| Inox India | ₹1,241 | 51x | 38% | 21.8% | ₹11,262 Cr |
| HBL Power | ₹636 | 63x | 26% | 19.9% | ₹17,656 Cr |
| Subros | ₹965 | 42x | 21% | 9.6% | ₹6,305 Cr |
🧠 Aeron is cheap in P/E terms, but needs scale and visibility to deserve a re-rating.
11. 🕵️ Miscellaneous – Shareholding, Promoters
- 👑 Promoter Holding: 73.63%
- 🐳 Nav Capital, Ag Dynamic, India-Ahead Ventures — all invested
- 👥 Public Shareholding rose to 23% in Mar 2025
- 📈 No pledging, no dilution shenanigans
Investor call transcripts from May 2025 hint at high confidence and long-term ambitions.
12. 🧑⚖️ EduInvesting Verdict™
Aeron isn’t a glamour stock — no tech buzzwords, no startup fairy tales.
But it’s a legit niche materials play with:
- Scalable product line (CFRP rebars = big addressable market)
- Reasonable valuation
- Strong 5-year profit CAGR
⚠️ Watch for:
- Working capital stress
- Execution of capex
- Margin protection
Is it a multibagger? Too early to say.
Is it reasonably priced for an SME with 25% ROE and 35% PAT CAGR? Yep.
🎯 Fair Value Range: ₹243–₹297
✍️ Written by Prashant | 📅 July 8, 2025
Tags: Aeron Composites, FRP rebars, SME stock analysis, capex expansion, CFRP, smallcap growth stock, industrials, EduInvesting style
