Buy KSB Pumps; target of Rs 795: ICICI Direct

ICICI Direct's research report on KSB Pumps

Total operating income in Q4CY18 came in at Rs 346.6 crore, up 5.6% YoY. In terms of segmental break-up, the pumps division reported sales at Rs 287 crore, up 3.8% YoY while the valves division reported sales at Rs 60 crore, up 15.4% YoY EBITDA margins in Q4CY18 came in healthy at 13.8% in Q4CY18. The corresponding EBITDA was at Rs 47.9 crore. The EBIT margin for the valves segment improved to 10.5% (10.4% in Q4CY17). PAT in Q4CY18 came in at Rs 25.3 crore, down 7.5% YoY. Associate company i.e. MIL Control Valves reported lower PAT share for CY18 at Rs 4.3 crore, down 17.3% YoY.

Outlook

It has a debt free balance sheet with surplus cash of ~Rs 140 crore. Over CY18-20E, we expect KSB to clock sales, EBITDA & PAT CAGR of 9.0%, 11.6% & 17.6%, respectively. Core RoICs are also expected to improve to 16.2% by CY20E vs. 14.7% in CY18. We value KSB at Rs 795 i.e. 28x P/E on CY20E EPS of Rs 28.4. We maintain our BUY rating on the stock.

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Read More First Published on Mar 22, 2019 03:06 pm