Given that its fortunes are closely tied to industrial activity, KSB Pumps Ltd’s fourth quarter results signal that the company is back on track. While revenue for quarter ended December, at Rs153.7 crore, was 12% lower than the year-ago period, it was sequentially higher by around 10%.
With tight cost control and a contraction in expenditure, the firm was able to minimize the impact on net profit, which at Rs17.5 crore was 8% higher than the year-ago period. Despite material costs rising, KSB was able to cut back raw material costs by about 6 percentage points to 41% of revenue from 47% during the periods under review. The immediate relief was evidently at the operating level, where profits improved by 23% from the year-ago to Rs34 crore in the December quarter.
KSB manufactures industrial power-driven pumps, valves and other related products which are used by industries such as oil and gas, chemicals, paper, water and waste water and so on.
For 2009, while most industrial vendors saw a margin contraction, KSB registered a growth in operating profit margin to 20% from 17% in the previous year. While the company’s profits rose at the operating level, higher depreciation and tax lowered the net profit for the year by 10% compared with the previous year. Net profit for 2009 stood at around Rs64 crore.
While KSB has not made any forward-looking statements on the year ahead, analysts reckon that as industrial recovery is firmly established, there is little downside for the stock.
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