Financial Daily from THE HINDU group of publications
Sunday, Jun 27, 2004
Financial Daily from THE HINDU group of publications Sunday, Jun 27, 2004 |
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Investment World
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Stocks Markets - Recommendation Kirloskar Brothers: Buy
INVESTORS with a one to two-year horizon can pick up the stock of Kirloskar Brothers (KBL) in small lots. At Rs 335, the stock trades at 7 times its consolidated March 2004 per share earnings. The valuation appears attractive, given the prospects for the irrigation and water management projects, where KBL has a significant presence. KBL manufactures and exports pumps and takes up turnkey water management and irrigation projects. KBL derives close to 50 per cent of its revenues form lift irrigation projects, which is the fastest growing segment. The company has supplied to projects such as Sardar Sarovar Nigam and lift irrigation projects in Andhra Pradesh and Karnataka. Project investments in the water treatment and supply schemes undertaken by State Governments have increased by 18 per cent in 2003-04. Irrigation projects worth Rs 1,18,069 crore are pending implementation as on April 2004 (Source: CMIE). Given the Government's pro-agriculture stance and the commitment to complete all pending irrigation projects by 2007, the growth prospects appear bright for the segment. KBL also has a presence in the power segment and has supplied fluid handling systems to companies such as NTPC and Nuclear Power Corporation. The other segments include industrial pumps, domestic pumps and agricultural pumps. In the agricultural segment, volume growth can be expected, as monsoons appear to be on time. Pricing pressure may, however, subdue growth. The domestic segment, especially submersible pumps used in borewells, has been picking up; growth prospects, too, appear bright, as ground water levels have been receding. KBL has recently acquired certain assets and business of SSP Pumps, a pump manufacturing company in UK. This company has a presence in the segments such as construction, irrigation, fire fighting, water supply and sewerage. The acquisition would give KBL better reach in overseas markets. Exports constitute 18 per cent of the turnover of KBL.
Sowmya Sundar
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