KSB, a prominent global manufacturer of pumps and valves, experienced a strong uptick in its stock price, surging by nearly 5.5% to reach ₹3,081.85 per share during early trade on Thursday.
This increase came following the company's reception of a letter of award under the PM-Kusum III Scheme under Component B. The award is valued at ₹27.78 crore and pertains to the supply of 800 solar water pumping systems from the Department of Agriculture, Uttar Pradesh.
KSB, in a regulatory filing, stated that the sales and supply of products and services related to these orders are anticipated to commence in the fourth quarter of FY 2023.
KSB is a leading international manufacturer of pumps and valves. It specialises in centrifugal end suction pumps, high-pressure multistage pumps, industrial gate, globe, check valves, submersible motor pumps, monobloc and mini monobloc pumps, hydro-pneumatic systems, and control valves.
Over the past two years, the company's shares have achieved a remarkable return of 142%. Looking at a slightly longer horizon, over the last three and five years, they have demonstrated even more impressive performance, surging by 551.65% and 333.79%, respectively.
From their all-time low of ₹96.50, the shares have experienced an extraordinary increase of 3000%, now trading at an impressive level of ₹2,994.
Earlier in July, domestic brokerage firm ICICI Direct Research expressed optimism about KSB's prospects, positioning the company to benefit substantially from the increasing capital expenditure in the infrastructure and industrial sectors.
The brokerage's confidence stemmed from KSB's strategic focus on expanding its market share by introducing new products and growing its after-market business. This strategic emphasis led the brokerage to anticipate significant improvements in KSB's operational and financial performance in the coming period.
The company continues to focus on increasing its market share and presence in existing and newer segments through expanding product offerings and a wide distribution network. The company has launched several new products for segments like firefighting, railways, building, and water waste management, it added.
KSB’s consolidated revenue grew at 12.1% CAGR over the last 3 years (CY19–22). However, over the next two years, the brokerage expects revenue growth at 15.7% CAGR over CY22-24E, led by a better demand scenario for pumps & valves coupled with a focus on expanding the product portfolio, distribution network, and increase in after-sales business.
The brokerage also highlighted the gradual improvement in KSB's return ratios over the past four years, attributing this progress to prudent capital allocation and enhanced profitability. It expects return ratios to improve further, with RoCE at 20% and RoE at 18% in CY24E, led by an increase in profitability on better sales growth and margins.
In the April-June quarter, KSB reported a consolidated net profit of ₹63 crore, reflecting a YoY increase of 34%. During the same period, consolidated revenue from operations surged by 41.38% YoY, reaching ₹591 crore.
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