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 April 25, 2019.
ICICI Direct's research report on KSB
KSB Ltd reported an outperformance across all operational parameters in Q1CY19. Standalone revenue, EBITDA and PAT recorded growth of 36.1%, 58.2% and 40.2%, respectively, YoY. Topline growth was driven partly by higher order execution from the oil & gas and exports segments. Standalone revenues for Q1CY19 were at Rs 289.3 crore wherein the pumps segment contributed Rs 243.1 crore (up 40.7% YoY) while valves contributed Rs 46.2 crore (up 17.2%). EBITDA margins were at 11.0%, up 150 bps YoY due to benefits of operating leverage slightly offset by elevated input costs. Consequent standalone PAT was at Rs 15.7 crore.
KSB has a debt free balance sheet with surplus cash of ~Rs 139 crore. Over CY18-20E, we expect KSB to clock sales, EBITDA & PAT CAGR of 13.5%, 19.9% & 26.8%, respectively. Core RoICs are also expected to improve to 17.2% by CY20E vs. 13.6% in CY18. We value KSB at Rs 810 i.e. 24.5x P/E on CY20E EPS of Rs 33.1 and retain our BUY rating on the stock.
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