Broker's Call

IFIN

KSB Pumps (Buy)

CMP: Rs 199.80

Target: Rs 285

KSB Pumps Ltd reported increase in top line by 15 per cent q-o-q to Rs 197 crore (down 13 per cent y-o-y) due to healthy demand for valves and pumps in a stiff macro environment for capital goods sector. Operating profit margins improved to 13 per cent (up 190 bps y-o-y and 260 bps q-o-q) in 4QCY12 with rise in sales and decrease in raw material cost.

Raw material cost as a percentage of sales declined by 800 bps y-o-y to 49 per cent. Interest expense declined 13 per cent y-o-y to Rs 1.2 crore. Tax rate declined to 24 per cent and incurred total tax expense of Rs 6.2 crore. Resultant of increase in operating profit margins and decline in tax rate lead to increase in bottom line to Rs 19.5 crore (up 21 per cent y-o-y and 51 per cent q-o-q). Going forward, order booking from sectors such as oil and gas, chemical, agriculture, process and food industry is likely to drive demand for pumps and valves segments.