KSB Ltd. share price target

ICICI Securities Ltd | Retail Equity Research Revenues declined ~11% YoY to | 740.6 crore (I-direct estimate: | 818.8 crore), due to ~22% decline in export formulations to | 305.1...

KSB Pumps revenues remained flat at Rs.5,752mn during 9MFY15 as against Rs.5,716mn of 9MFY14 while the operating expenses increased by 4.5% to reach Rs.5,120mn reducing EBITDA to Rs.631mn, which is lower by 22.5% compared to 9MFY14. EBITDA and PAT margins were reduced by 328bps and 179 bps to reach 11.2% and 7.9% by end of 9MFY15. During Q3FY15, the revenue and operating expenses declined by 6.6% and 18.1% respectively on YoY basis to Rs.1,858mn and Rs1,648mn improving EBITDA by 7.8% to Rs.291mn compared to Q3FY14 with EBITDA margin expansion of over 200bps during Q3FY15.

Karvy initiates coverage on KSB Pumps Ltd (KSB) with a Buy Rating. With demand picking from process industries such as power, oil & gas, petchem and chemicals KSB revenues could grow by a CAGR of 11% during FY14-16E. KSB India has strong backing from parent KSB AG which we believe could act as a key differentiator for market leadership as there are only few players in India capable of manufacturing technologically complex pumps fulfilling requirements of DNI, ANSI, API. In the retail segment, KSB has recently launched solar powered pumps focusing on solarisation of agri pumps which we believe could open-up new market for KSB and other pumps manufacturers, as the focus shifts from initial cost to total cost of ownership in the agri segment. Exports to contribute to over 18% of KSB Indias revenues by FY16E and over 90% of the exports sales are expected to occur between KSB & its associates. KSB India contributes close to 17.5% of KSB AGs consolidated profits.