KSB Pumps Ltd (Rs 408)
(BSE Code – 500249, NSE Code - KSBPUMPS)
(P/E - 10, Equity - Rs17.4 cr, Market Cap - Rs710 cr)
KSB Pumps(KSB), Indian subsidiary of the German parent KSB AG is a leading producer of pumps and valves for fluid handling including waters in India. KSB Pumps was incorporated in 1960 by KSB AG, Germany, one of the largest pump manufacturers in the world. One of its technical collaborators, Canadian Kay Pump, is the main shareholder, holding a 40.54% stake in the company, the Indian promoters hold 26.28%, taking the total promoter holding to 66.82% on a equity of 17.4 cr. Within the KSB Group globally, KSB India has relatively the highest range of pumps and valves to offer. Even among its competitors in India, KSB India has a large range of pumps to offer under one roof. Both these give the company the required competitive edge over its peers. Pumps and valves form part of large projects across the aforesaid industries. KSB manufactures various pumps and valves of various specifications to enable fluid transportation. It is perhaps the only company that manufactures pumps and valves to support functions of agricultural sector and water and sewage management systems apart from industrial applications such as power, petrochemicals, etc. The growth of the pump and valves sector is driven by the growth and increased investments in power and energy sectors apart from the agricultural sector.
KSB has 5 plants in India – two in Pune that cater to the requirements of irrigation and power projects, one in Nashik that manufactures multistage pumps, water and submersible motor pumps, a valve manufacturing plant in Coimbatore and a foundry in Ahmednagar to support captive consumption of castings. KSB earns 30% of its revenues by way of sales of standard products, 65% through project based (made to order) revenues and the remaining by way of after sales services KSB also takes up project execution on turnkey basis and caters to niche industrial as well as highly competitive low margin agricultural and domestic (residential/commercial buildings) segments. On industrial front the company caters to diverse industries such as chemicals, petrochemicals/ refiners, breweries/distilleries etc and power generation (both thermal and nuclear for feeding water to boilers).
KSB has registered 20% compounded annual growth in revenues in past 5 years, while bottom-line growth for the same period stood at 31%. The government’s increased focus on infrastructure investment led to increase in demand of pumps and valves. Thus, the top-line growth has come in on account of increased volumes. On the other hand, the earnings growth has been supported by improved product mix, cost control measures and introduction of new products in the high growth areas such as submersible business. For the year ended Dec. 2008, KSB posted net sales of Rs 601 cr.(up 29%) and net profit of Rs 64.7 cr.(up 38%). On a equity of 17.4 cr., the EPS stood at Rs 37.2 and the dividend declared was 55%. For the nine months ended Sept. 2009, KSP has posted net profit of Rs 48.87 cr. (up 1%) on net sales of Rs 411 cr..(down 2.6%). Interim dividend of 20% has also been declared.
Going forward, the growth is expected to come in on account of government’s increased investments in industrial sector and increased investments in agricultural sector. KSB Pumps being a leading manufacturer of custom-made pumps and valves is all set to reap the benefit of increased investments in end user industries. The company foresees 10% to 12% growth in top-line. The same would be on account government’s increased focus and investments in agricultural and infrastructural activities to sustain and boost economic growth.. At the current price of Rs 408, the stock is trading at 10 times expected CY09E earnings. Invest in small lots and accumulate on weakness linked to broad markets. Investors can start accumulating the stock at current levels and add more on declines for decent returns of 40%-45% over the next 6-8 months.
Source: Internet (Valuenotes by Sanjay Chhabria)
(BSE Code – 500249, NSE Code - KSBPUMPS)
(P/E - 10, Equity - Rs17.4 cr, Market Cap - Rs710 cr)
KSB Pumps(KSB), Indian subsidiary of the German parent KSB AG is a leading producer of pumps and valves for fluid handling including waters in India. KSB Pumps was incorporated in 1960 by KSB AG, Germany, one of the largest pump manufacturers in the world. One of its technical collaborators, Canadian Kay Pump, is the main shareholder, holding a 40.54% stake in the company, the Indian promoters hold 26.28%, taking the total promoter holding to 66.82% on a equity of 17.4 cr. Within the KSB Group globally, KSB India has relatively the highest range of pumps and valves to offer. Even among its competitors in India, KSB India has a large range of pumps to offer under one roof. Both these give the company the required competitive edge over its peers. Pumps and valves form part of large projects across the aforesaid industries. KSB manufactures various pumps and valves of various specifications to enable fluid transportation. It is perhaps the only company that manufactures pumps and valves to support functions of agricultural sector and water and sewage management systems apart from industrial applications such as power, petrochemicals, etc. The growth of the pump and valves sector is driven by the growth and increased investments in power and energy sectors apart from the agricultural sector.
KSB has 5 plants in India – two in Pune that cater to the requirements of irrigation and power projects, one in Nashik that manufactures multistage pumps, water and submersible motor pumps, a valve manufacturing plant in Coimbatore and a foundry in Ahmednagar to support captive consumption of castings. KSB earns 30% of its revenues by way of sales of standard products, 65% through project based (made to order) revenues and the remaining by way of after sales services KSB also takes up project execution on turnkey basis and caters to niche industrial as well as highly competitive low margin agricultural and domestic (residential/commercial buildings) segments. On industrial front the company caters to diverse industries such as chemicals, petrochemicals/ refiners, breweries/distilleries etc and power generation (both thermal and nuclear for feeding water to boilers).
KSB has registered 20% compounded annual growth in revenues in past 5 years, while bottom-line growth for the same period stood at 31%. The government’s increased focus on infrastructure investment led to increase in demand of pumps and valves. Thus, the top-line growth has come in on account of increased volumes. On the other hand, the earnings growth has been supported by improved product mix, cost control measures and introduction of new products in the high growth areas such as submersible business. For the year ended Dec. 2008, KSB posted net sales of Rs 601 cr.(up 29%) and net profit of Rs 64.7 cr.(up 38%). On a equity of 17.4 cr., the EPS stood at Rs 37.2 and the dividend declared was 55%. For the nine months ended Sept. 2009, KSP has posted net profit of Rs 48.87 cr. (up 1%) on net sales of Rs 411 cr..(down 2.6%). Interim dividend of 20% has also been declared.
Going forward, the growth is expected to come in on account of government’s increased investments in industrial sector and increased investments in agricultural sector. KSB Pumps being a leading manufacturer of custom-made pumps and valves is all set to reap the benefit of increased investments in end user industries. The company foresees 10% to 12% growth in top-line. The same would be on account government’s increased focus and investments in agricultural and infrastructural activities to sustain and boost economic growth.. At the current price of Rs 408, the stock is trading at 10 times expected CY09E earnings. Invest in small lots and accumulate on weakness linked to broad markets. Investors can start accumulating the stock at current levels and add more on declines for decent returns of 40%-45% over the next 6-8 months.
Source: Internet (Valuenotes by Sanjay Chhabria)
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