PowerYourTrade: Multibagger – KSB Pumps

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.