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In the quarter ended June 2010, Kennametal India's net profit grew by significant 186% to Rs 14.47 crore on impressive operating performance and supportive non operating costs. The topline grew by notable 66% to Rs 107.91 crore backed by growth in both hard metals and machine tools sales. Increase in OPM by 710 bps boosted the operating profit by whopping 139% to Rs 24.93 crore. Marginal increase in depreciation cost and low interest cost (nil in June 2009 quarter) lifted the net profit by whopping 186% to Rs 14.47 crore.
Kennametal India is a leading manufacturer of hard metal products and machine tools, catering to the needs of a wide variety of manufacturing industries including auto and auto components, light and general engineering, and defence.
Quarter Performance
The company's topline grew by impressive 66% to Rs 107.91 crore on robust growth across both segments especially hard metals and its products (hard metals) that contribute 85% to total. Hard metals sales grew by notable 59% to Rs 92.19 crore while the machine tools sales grew by significant 132% to Rs 15.72 crore. Increase in operating profit margin (OPM) by 710 bps lifted the operating profit by whopping 139% to Rs 24.93 crore. In terms of cost, as % to sales net stock adjusted, the raw material cost crashed by 150 bps to 21%. Also the staff cost and cost of traded goods reduced by 540 bps to 18% and 20 bps to16% respectively. Only the other expenditure increased by 40 bps to 22%.
Segmentwise, hard metals' PBIT margin grew by whopping 770 bps to 27% boosting its PBIT by significant 122% to Rs 24.96 crore. Also the machine tools' PBIT margin grew by 50 bps to 5% lifting its PBIT by whopping 159% to Rs 0.75 crore.
The company's PBT grew by substantial 193% to Rs 21.34 crore due to marginal growth in non operating expenses despite fall in other income. The interest cost stood at Rs 0.01 crore (against nil in June 2009 quarter) while the depreciation cost grew by flat 2% to Rs 5.01 crore. The other income reduced by 20% to Rs 1.43 crore. However 170 bps growth in effective tax rate limited the growth in net profit though to whopping 186% to Rs 14.47 crore.
Annual Performance
In the year ended June 2010, the company's net sales grew by 22% to Rs 372.25 crore largely due to hard metals sales. The hard metal sales grew by 26% to Rs 324.21 crore while the machine tools grew only by flat 2% to Rs 48.04 crore. Increase in OPM by 780 bps to 23.2% boosted the operating profit by impressive 83% to Rs 86.37 crore. Segmentwise, the PBIT margin of hard metals' grew by whopping 710 bps to 27% lifting its PBIT by notable 69% to Rs 88.26 crore. On the other hand, the machine tools' PBIT margin fell by 70 bps to 11% resulting in 4% fall in PBIT to Rs 5.38 crore.
Despite the interest cost doubling to Rs 0.04 crore and marginal growth in depreciation cost by 8% to Rs 20.29 crore, the company's PBT grew by impressive 86% to Rs 76.65 crore. The net profit settled with whopping 85% growth to Rs 51.97 crore after accounting the tax provision.
The Board of Directors had declared and paid interim cum final dividend of Rs 13 per equity share for year ended June 2010
The promoters' share in the total shareholding remains unchanged at 88.16% in June 2010 quarter. The promoters' have pledged ‘nil' shares of the company.
Currently the scrip is trading at Rs 452 on BSE.
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