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Tuesday, March 17, 2009

Multi Bagger - Buy Stocks Recommendation On KSB Pumps

Multi Bagger: Buy Stocks Recommendation On KSB Pumps
S.P.Tulsian, Investment Advisor

KSB Pumps is a part of the KSB AG group, a leading international player in the pumps and valves business. KSB has its major plants located at Pune and Nasik in Maharashtra, and in Coimbatore in Tamil Nadu.

KSB has more than 30 manufacturing sites in 19 countries. At each of them, we produce our pumps and valves to global quality standards. The pump range covers a vast spectrum - from domestic rainwater utilization systems to process pumps or power station boiler feed units. Valves come in a choice of designs, sizes and materials for a whole spread of applications.

KSB Pumps provides and distributes water to private, public and industrial buildings through their pumps ad valves. They solve heating and air-conditioning problems. Chemical, petrochemical and many other companies use them to transport aggressive, corrosive, explosive, solids-laden and viscous liquids. KSB products deal with industrial and municipal waste water.

KSB India is currently the largest manufacturer of the group outside Germany. It serves as an important sourcing location for the KSB Group worldwide.

The company has posted a good set of results for the year ended 31st Dec 2008. Net sales rose 29% to Rs 602.21 crore in the year ended December 2008. Net profit was up by a whopping 61% at Rs 71.51 crore. The company has a very low interest outgo. It was at Rs 2.20 crore as on 31st Dec 2008.

The floating stock of the company remains very low. As on 31st Dec 2008, promoters held 66.58% of the equity and institutional holding was at 16.34% of which Reliance Capital Trustee held 8.24%. This leaves just 17.08%.

The company recently installed an additional plant at its existing facility in Sinnar near Nashik, thereby doubling the capacity to 12,000 sq. m of production bays.

In an increasingly difficult economic climate, order intake can be expected to weaken and to lag behind sales revenue. The project business, which is driven by public infrastructure projects, could show greater stability than its business with standard products. For 2009, the company aims to maintain its profit levels, rather than aim at unrealistic growths.

For the year ended 31st Dec 2008, EPS on a face value of Rs 10 per share stood at Rs 41.09. And at the current price of Rs 210.45, this gives of discounting of less than 5.

At the current price of Rs 210.45, the stock is clearly a bargain for a good long term value creation.

Mkt Cap: 386.37
P/E: 5.97
Div: 55.00
EPS (TTM): 37.19
B/V: 173.78
Mkt Lot: 1.00
FV: 10.00

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