Anand Rathi Recommends To Buy This Stock For 40% Upside In Near Term

Reputed brokerage firm Anand Rathi suggests investors buying the stock of KSB for a 28% return. The company's revenue from standard pumps climbed to 48% in CY21, from CY20's 41%, driven primarily by the higher projects business seeing greater demand from agriculture, industry, water and waste-water, and buildings.

Target Price

The Current Market Price (CMP) of KSB is Rs. 1055. Anand Rathi has estimated a Target Price for the stock at Rs. 1352. The stock is expected to offer a 28% upside, in 1 year.

Stock Outlook
Current Market Price (CMP)	Rs. 1055
Target Price	Rs. 1352
1 year return	28.00%

Company performance

The company's Q4 revenue grew 20% y/y to Rs4.4bn. Pump revenue was up 25% y/y, while valve revenue slipped 1.6% y/y. Higher raw material prices cut into profitability, with the EBITDA margin contracting 767bps y/y to 12.7%. Healthy demand and a better CY21 leads us to slightly raise the brokerage firm's revenue estimates. CY21 order inflows were of Rs. 15bn (Rs. 13bn in CY20) and the management targets Rs. 25bn order intake in CY24. Export revenue in CY21 shot up 44% y/y to Rs. 2.9bn; its proportion to revenue rose from 17.1% in CY20 to 20.2% in CY21.

Comments by Anand Rathi

About the stock, Anand Rathi stated in a recent report, "We believe KSB is well placed to benefit from strong opportunities in FGD, nuclear power, O&G, and exports. Such prospects would also boost its after-market and services (15% of its sales) due to increased installed base and expansion in dealer network and service centres. However, increased raw material cost impacted the profitability. Good prospects in FGD, nuclear, services. With capacity built up ahead of competition and pre-qualification in place, we expect good opportunities in FGD and nuclear."

About the company

KSB has footprints in mining, petrochemicals, energy, services, valves and pump businesses. KSB employs over 15,000 people in development, production, sales and service around the globe. Founded in 1871, the company has 190 Service centres. In CY21 KSB developed gamma pumps, used in industry and water and waste water treatment. It already has orders for ~340 pumps and looks at 500-600 pump orders in CY22. In FGD, the company bagged orders of Rs. 295m, from NTPC, DVC Mejia and NTPL. In CY21, it supplied 170 pumps.

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Disclaimer

The above stock was picked from the brokerage report of Anand Rathi. Investing in equities poses a risk of financial losses. Investors must therefore exercise due caution. Greynium Information Technologies, the author, and the brokerage house are not liable for any losses caused as a result of decisions based on the article.