KSB zooms 19% in a weak market on healthy June quarter performance

The Government's focus on irrigation projects, drinking water supply, sanitisation projects and urban housing is expected to drive the demand for pumps in the water segment

Shares of KSB hit a new high of Rs 2,730.70, zooming 19 per cent on the BSE in Thursday's intra-day trade, in an otherwise weak market, after the company reported healthy performance in June quarter (Q2FY24). In the past three weeks, the stock has rallied 35 per cent.

Today, the stock surpassed its previous high of Rs 2,356.85 touched on May 9, 2023. In comparison, the S&P BSE Sensex was down 1 per cent at 65,124 at 01:52 PM.

KSB is engaged in the business of manufacture of power driven pumps and industrial valves. Castings are mainly produced for captive consumption.

In Q2FY24, KSB reported 32.5 per cent year-on-year (YoY) jump in consolidated profit after tax at Rs 62.80 crore on the back of healthy revenue growth. Earnings before interest, taxes, depreciation, and amortisation (Ebitda) margin improved to 14.4 per cent (+ 78 bps YoY, + 273 bps QoQ) primarily led by positive operating leverage.

Revenue increased by 31.9 per cent YoY to Rs 591.3 crore led by strong growth in both the segments. Pump segment (~ 85 per cent of revenues) grew by 31.6 per cent YoY to Rs 501.8 crore while Valves segment revenue (~ 15 per cent of revenue) increased b y 34.0 per cent YoY to Rs 90.3 crore.

The focus of government on infrastructure and capital expenditure is expected to crowd-in private investment benefitting the capital goods industry. Indian pump industry is one of the fastest growing markets in the world.

The Government's focus on irrigation projects, drinking water supply, sanitistion projects and urban housing is expected to drive the demand for pumps in the water segment. A series of capacity expansion drives and greenfield projects in the petrochemical, steel, cement and other allied industries will help the pump and the valve markets, KSB said in its annual report.

With the growth in manufacturing, process industries, hospitality and real estate, the Indian pump market is expected to grow at a sustained pace over the medium term. The technological innovations in this sector are contributing to the drive towards greener and sustainable manufacturing, the company said.

KSB’s Q2CY23 performance remains strong and was better than expectations. Demand remains healthy for pumps & valves from sectors like industrials, petrochemical, water, nuclear etc, which has led t o strong revenue growth during the quarter.

Going ahead, ICICI Securities believes that buoyant capex scenario in both industrial and infra segments would continue to drive demand for pumps and valves. Moreover, company’s focus on expanding product portfolio and increasing share in services and spares would help company in further improving its margins in the coming period.