Metalworking tools are made of cemented tungsten carbides, ceramics, cermets and super-hard materials.

Its product offering includes a wide selection of standard and customized technologies for metalworking, such as sophisticated metal cutting tools, tooling systems and services, as well as advanced, high-performance materials, such as cemented tungsten carbide products, super alloys, coatings and investment castings to address customer demands. It offers these products through a variety of channels to meet customer- specified needs.

The company also manufactures and markets a complete line of tool holders, tool-holding systems and rotary-cutting tools by machining and fabricating steel bars and other metal alloys.

In addition, it produces specialized compacts and metallurgical powders, as well as products made from tungsten carbide or other hard materials that are used for custom-engineered and challenging applications, including mining and highway construction, among others

It seeks to provide a competitive edge to its customers through a wide variety of standard high quality products as well as items customized to their requirements such as special purpose machines, metalworking tools, customized tooling solutions and engineered products.

The company's business can be bifurcated in to Hard Metals and Hard Metals Products and Machining Solution.

September 2018 quarter results

For the quarter, net sales jumped 25% to Rs 226.80 crore. OPM improved 770 basis points to 18.8% which saw OP jump 112% to Rs 42.70 crore.

Other income fell 30% to Rs 1.40 crore. Interest cost was nil as the company is a debt free company.

As depreciation stagnated at Rs 7.20 crore, PBT soared 148% to Rs 36.90 crore.

As tax jumped 155% to Rs 12.50 crore (tax incidence grew from 32.9% to 33.9%) PAT soared 144% to Rs 24.40 crore.

FY 2018 (ending June) results

For FY 2018 (ending June), net sales grew 22% to Rs 793.12 crore. OPM improved 370 basis points to 12.7% which saw OP jump 72% to Rs 100.45 crore.

Other income grew 43% to Rs 8.36 crore. Interest cost was nil as the company is a debt free company.

As depreciation fell 1% to Rs 28.11 crore, PBT soared 125% to Rs 80.70 crore.

EO loss stood at Rs 7.70 crore against Rs 5.50 crore. Thus PBT after EO grew 140% to Rs 73.00 crore.

As tax (including tax write back relating to previous years of Rs 4.60 crore against NIL) jumped 246% to Rs 20.74 crore PAT grew 114% to Rs 52.26 crore..

Segment results

For the quarter, sales from the Machining Solutions division jumped 44% to Rs 30.40 crore and accounted for 13% of sales. PBIT soared to Rs 5.90 crore against a loss of Rs 80 lakh and accounted for 14% of total.

For the quarter, sales from the Hard Metals and Hard Metals Products grew 23% to Rs 196.40 crore and accounted for 87% of sales. PBIT from the same grew 69% to Rs 37.70 crore and accounted for 86% of total.

For FY 2018, sales from the Machining Solutions division grew 27% to Rs 122.26 crore and accounted for 15% of sales. PBIT from the same grew 39% to Rs 12.55 crore and accounted for 12% of total.

For FY 2018, sales from the Hard Metals and Hard Metals Products grew 12% to Rs 670.85 crore and accounted for 85% of sales. PBIT from the same grew 68% to Rs 91.99 crore and accounted for 88% of total.

Market condition

The company serves markets like Automobile (2W, PV, LCV and MHCV), tractors which have been performing well. Aerospace, Defence and railways likely to do well.

Other segments like steel, capital investments in manufacturing (including greenfield activities), Oil & Gas Energy and Mining are also picking up.

Strategy

Going forward the company hopes to consolidate and grow its core business and enhance its market reach by expanding distribution channel.

It also plans to diversify and has increased focus in aerospace, defence, railways segments.

It is also exploring exports of its Machining Solutions Group (MSG) products.

The company has taken special initiatives to grow the WIDIA business.

It will continue to modernize and upgrade its manufacturing facilities.

Valuation

The scrip trades around Rs 870.