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Kennametal India (75% controlled by Kennametal USA) is a leading manufacturer of hard metal products and machine tools which cater to the needs of a wide variety of manufacturing and other industries such as transportation, general engineering, aerospace & defense, energy, power generation equipment, earthworks, mining and construction.
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.
March 2016 quarter results
In quarter ended March 2016, sales grew 1% to Rs 144.03 crore.
OPM fell 110 basis points from 9.2% to 8.1% which saw OP fall 1% to Rs 11.64 crore.
Other income grew 5% to Rs 1.56 crore.
Interest cost was nil as the company is a debt free company.
As depreciation fell 6% to Rs 5.99 crore, PBT rose 4% to Rs 7.21 crore.
Provision for taxation fell 16% to Rs 2.15 crore after which PAT fell 1% to Rs 5.06 crore.
Nine months results
For the nine months ended March 2016, sales grew 1% to Rs 415.50 crore.
OPM fell 210 basis points from 9.6% to 7.5% which saw OP fall 21% to Rs 31.30 crore.
Other income fell 16% to Rs 36.75 crore.
Interest cost was nil as the company is a debt free company.
As depreciation fell 9% to Rs 17.97 crore, PBT fell 22% to Rs 18.78 crore.
Provision for taxation fell 20% to Rs 5.24 crore after which PAT fell 23% to Rs 13.54 crore.
Quarter Segment results
For the quarter, sales from the Machine Tools grew 50% to Rs 27.81 crore and accounted for 19% of sales. PBIT from the same fell 46% to Rs 1.81 crore and accounted for 13% of total.
For the quarter, sales from the Hard Metals and Hard Metals Products grew 6% to Rs 116.27 crore and accounted for 81% of sales. PBIT from the same grew 19% to Rs 11.60 crore and accounted for 87% of total.
For the nine months, sales from the Machine Tools grew 17% to Rs 72.59 crore and accounted for 17% of total. PBIT from the same crashed 59% to Rs 3.45 crore and accounted for 10% of total.
For the nine months, sales from the Hard Metals and Hard Metals Products fell 2% to Rs 342.91 crore and accounted for 83% of sales. PBIT from the same fell 5% to Rs 31.71 crore and accounted for 90% of total.
Strategy going forward
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.
Valuation
The share price trades at Rs 760.
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