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.

December 2018 quarter results

For the quarter, sales jumped 25% to Rs 233.70 crore. OPM improved 590 basis points to 16.6% which saw OP jump 94% to Rs 38.70 crore.

Other income grew 26% to Rs 2.90 crore. Interest cost was nil as the company is a debt free company.

As depreciation fell 8% to Rs 6.80 crore, PBT soared 134% to Rs 34.70 crore.

EO loss was NIL against Rs 4.70 crore. Thus PBT after EO grew 244% to Rs 34.70 crore.

Provision for tax jumped 308% to Rs 15.50 crore (tax incidence grew from 37.6% to 44.7%) after which PAT soared 205% to Rs 19.20 crore.

Prior period tax (PPT) credit was Rs 11.50 crore against NIL. Thus net profit (after PPT adjustment)grew 387% to Rs 30.70 crore.

While the company clubbed PPT along with the normal tax for the period, we have deducted PPT from normal tax for the period and shown separately below PAT.

For the six months, sales jumped 25% to Rs 460.50 crore. OPM improved 680 basis points to 17.7% which saw OP jump 104% to Rs 81.40 crore.

Other income grew 2% to Rs 4.30 crore. Interest cost was nil as the company is a debt free company.

As depreciation fell 4% to Rs 14.00 crore, PBT soared 142% to Rs 71.60 crore.

EO loss was NIL against Rs 4.70 crore. Thus PBT after EO grew 188% to Rs 71.60 crore.

Provision for tax jumped 222% to Rs 28.00 crore (tax incidence grew from 34.9% to 39.1%) after which PAT soared 169% to Rs 43.60 crore.

Prior period tax (PPT) credit was Rs 11.50 crore against NIL. Thus net profit (after PPT adjustment)grew 240% to Rs 55.10 crore.

While the company clubbed PPT along with the normal tax for the period, we have deducted PPT from normal tax for the period and shown separately below PAT.

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.

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.

Provision for tax jumped 322% to Rs 25.30 crore (tax incidence grew from 19.7% to 34.7%) after which PAT soared 96% to Rs 27.70 crore.

Prior period tax (PPT) credit was Rs 4.60 crore against NIL. Thus net profit (after PPT adjustment) grew 115% to Rs 52.30 crore.

While the company clubbed PPT along with the normal tax for the period, we have deducted PPT from normal tax for the period and shown separately below PAT.

Segment results

For the quarter, sales from the Machining Solutions division jumped 16% to Rs 28.80 crore and accounted for 12% of sales. PBIT grew 138% to Rs 5.70 crore and accounted for 14% of total.

For the quarter, sales from the Hard Metals and Hard Metals Products grew 27% to Rs 204.90 crore and accounted for 88% of sales. PBIT from the same grew 86% to Rs 35.50 crore and accounted for 86% of total.

For the six months, sales from the Machining Solutions division grew 29% to Rs 59.20 crore and accounted for 13% of sales. PBIT from the same grew 625% to Rs 11.60 crore and accounted for 14% of total.

For the six months, sales from the Hard Metals and Hard Metals Products grew 25% to Rs 401.30 crore and accounted for 87% of sales. PBIT from the same grew 71% to Rs 73.00 crore and accounted for 86% of total.

Profit of both the segments surge

For the quarter, PBIT margins for the Machining Solutions division jumped from 9.7% to 19.8% and the same in six months soared from 3.5% to 19.6%.

For the quarter, PBIT margins for the Hard Metals and Hard Metals Products division jumped from 12.4% to 17.2% and the same in six months soared from 13.3% to 18.2%.

Market condition

The company serves markets like Automobile (2W, PV, LCV and MHCV) tractors, Aerospace, Defence and railways.

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 1037.