X

Sign up for Equitymaster's free daily newsletter, The 5 Minute WrapUp and get access to our latest Multibagger guide (2018 Edition) on picking money-making stocks.

This is an entirely free service. No payments are to be made.


Download Now Subscribe to our free daily e-letter, The 5 Minute WrapUp and get this complimentary report.
We hate spam as much as you do. Check out our Privacy Policy and Terms Of Use.
KSB Pumps: Margins remain a concern - Views on News from Equitymaster
MidCapSelect
  • MyStocks

MEMBER'S LOGINX

     
Login Failure
   
     
   
     
 
 
 
(Please do not use this option on a public machine)
 
     
 
 
 
  Sign Up | Forgot Password?  

KSB Pumps: Margins remain a concern
Mar 2, 2011

KSB Pumps has announced its December quarter results. The company has reported a 14% growth in topline and a 31% fall in bottomline on a YoY basis. Here is our analysis of the results.

Performance summary
  • Topline grows by 14% YoY during the quarter.
  • Strong contraction in operating margins leads to a 45% fall in operating profits.
  • Bottomline suffers a fall of 31% YoY as higher other income and lower depreciation charges provide some relief.
  • Net profit for the full year falls by 22% YoY on the back of an 8% YoY growth in topline.
  • The company has announced a dividend of Rs 8 per share, translating into a yield of 1.7%. The company has also issued bonus shares in the ratio of 1:1

(Rs m) 4QCY09 4QCY10 Change CY09 CY10 Change
Net sales 1,537 1,752 14.0% 5,676 6,151 8.4%
Expenditure 1,198 1,564 30.6% 4,524 5,315 17.5%
Operating profit (EBDITA) 340 188 -44.7% 1,152  837 -27.4%
EBDITA margin (%) 22.1% 10.7%   20.3% 13.6%  
Other income   16   43 172.2% 78  119 53.2%
Interest (net)     1     2 171.4% 18   5  
Depreciation   78   55 -29.2%  203  207 2.0%
Profit before tax 276 173 -37.2% 1,008  743 -26.3%
Extraordinary items    -      -     -   -    
Tax 103   53 -48.3%  346  227 -34.5%
Profit after tax/(loss) 173 120 -30.7%  662  516 -22.1%
Net profit margin (%) 11.3% 6.9%   11.7% 8.4%  
No. of shares (m)    17.4    17.4   17.4 17.4  
Diluted earnings per share (Rs)*         29.6  
Price to earnings ratio (x)*         16.0  
(* on trailing twelve months earnings)

What has driven performance in 4QCY10?
  • The company operates predominantly through 2 business segments viz. pumps and valves. The 14% growth in overall revenues was driven by the latter as it managed a 44% YoY growth. The pumps business, which is around 4 times bigger than the valves segment managed a growth of just 8%, thus pulling the overall revenue growth down. It should be noted that the company mainly targets project based revenues. Thus, with new projects slowing down a bit, the revenue growth has not been as strong as expected. However, once the capex cycle turns for the better, company's revenues should also receive a boost.

    Segmental break up...
    Segment 4QCY09 4QCY10 Change CY09 CY10 Change
    Pumps            
    Revenues 1,331 1,442 8.3% 4,782 5,043 5.5%
    PBIT    252   128 -49.2% 875.6 632.8 -27.7%
    PBIT margin 18.9% 8.9%   18.3% 12.5%  
    Valves            
    Revenues    201   290 44.4%   857 1,041 21.4%
    PBIT 20     29 39.7%   111     52 -53.1%
    PBIT margin 10.2% 9.8%   13.0% 5.0%  
     Others             
    Revenues 74 119 60.8%   295   391 32.5%
    PBIT 1.8   (1.4)   1.8 -2.7  
    PBIT margin 2.4% n.a.   0.6% -0.7%  

  • All the cost heads grew at a faster rate than the growth in topline, thus pulling down the operating margin by a huge 11.4% during the quarter. Raw material expenses went up the most, registering a growth of 38% YoY and indicating limited ability to pass on the cost to costumers.

    Cost break-up...
    (Rs m) 4QCY09 4QCY10 Change CY09 CY10 Change
    Raw materials 597 825 38.3% 2,529 2,987 18.1%
    % sales 38.8% 47.1%   44.6% 48.6%  
    Staff cost 216 262 21.2%    798    918 15.0%
    % sales 14.0% 14.9%   14.1% 14.9%  
    Other expenditure 385 478 23.9% 1,197 1,410 17.8%
    % sales 25.1% 27.3%   21.1% 22.9%  

  • A 29% fall in depreciation charge has led to the 37% decline in PBT and the company saving some sort of face. At 31%, the fall in bottomline is slightly less and has been driven by a steep 48% fall in tax outgo.

What to expect?
At the current price of Rs 475, the stock trades at around 16 times its trailing twelve month earnings. Although the performance has come in below our estimates, we are positive on the company's prospects on a medium term basis given its strong presence in the pumps space. We maintain our view on the stock.

To Read the Full Story, Subscribe or Sign In


Small Investments
BIG Returns

Zero To Millions Guide 2018
Get our special report, Zero To Millions
(2018 Edition) Now!
We will never sell or rent your email id.
Please read our Terms

KSB PUMPS SHARE PRICE


Feb 20, 2018 (Close)

TRACK KSB PUMPS

  • Track your investment in KSB PUMPS with Equitymaster's Portfolio Tracker. Set live price alerts, get research alerts and more. Get access now...
  • Add To MyStocks

KSB PUMPS - ABB INDIA LTD. COMPARISON

COMPARE KSB PUMPS WITH

MARKET STATS