ICICI Direct is bullish on KSB Pumps has recommended buy rating on the stock with a target price of Rs 795 in its research report dated March 07, 2019.
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.
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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