Buy KSB; target of Rs 810: ICICI Direct

ICICI Direct is bullish on KSB has recommended buy rating on the stock with a target price of Rs 810 in its research report dated July 25, 2019.

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July 25, 2019 / 15:11 IST

26 Aug, 2025 12:21

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ICICI Direct's research report on KSB

KSB reported a robust performance on an overall basis in Q2CY19. Standalone revenue, EBITDA and PAT recorded growth of 19.0%, 12.2% and 29.9% YoY, respectively, YoY. Topline growth was likely driven by healthy order execution from the oil & gas and exports segment. On a segmental basis, pumps contributed Rs 248 crore (up 13.8% YoY) while valves contributed Rs 56 crore (up 52.9% YoY). EBITDA margins declined ~70 bps YoY to 10.6% due to higher input costs. EBIT margin for the pumps was at 8.9%, down 80 bps YoY. However, operating leverage helped boost valves segment margins at 6.1%, up ~200 bps YoY. KSB reported an exceptional item through sale of office property at Rs 12.7 crore. This drove PAT higher to Rs 27.8 crore, up 29.9% YoY.

Outlook

KSB possess a debt free balance sheet with surplus cash of ~Rs 207 crore as on H2CY19. Over CY18-20E, we expect sales, EBITDA & PAT CAGR of 14.2%, 19.4% & 25.4%, respectively. Core RoICs are also expected to improve to 16.9% by CY20E vs. 13.6% in CY18. We value KSB at Rs 810 i.e. 25x P/E on CY20E EPS of Rs 32.4. We maintain our BUY rating on the stock.

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