|
Kennametal India (75% controlled by Kennametal USA) specializes in developing and manufacturing sophisticated hard material cutting and wear protection solutions ranging from specialized cutting tools, indexable inserts and carbide rods to new types of carbide wear-resistant engineered components and coatings using a specialized type of powder metallurgy and providing innovative wear resistant solutions across diverse sectors like transportation, earthworks, energy, infrastructure and aerospace.
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.
Quarter results
For the quarter, sales grew 3% to Rs 231.80 crore. OPM fell 30 basis points to 11.8% which saw OP stagnant to Rs 27.30 crore.
Other income grew 26% to Rs 5.30 crore. Interest cost was Rs 20 lakh against nil.
As depreciation stagnated at Rs 7.00 crore, PBT grew 4% to Rs 25.40 crore.
EO gain was NIL against Rs 3 crore. Thus PBT after EO grew 19% to Rs 25.40 crore.
Provision for tax grew 24% to Rs 7.80 crore (tax incidence grew from 29.4% to 30.7%) after which PAT grew 17% to Rs 13.70 crore.
FY 2019 results
In FY 2019 (ending June), sales jumped 16% to Rs 923.90 crore. OPM improved 210 basis points to 14.7% which saw OP jump 35% to Rs 136.10 crore.
Other income grew 67% to Rs 14.00 crore. Interest cost was Rs 50 lakh against nil.
As depreciation stagnated at Rs 28.00 crore, PBT soared 51% to Rs 121.60 crore.
EO loss was Rs NIL against Rs 7.70 crore. Thus PBT after EO grew 67% to Rs 121.60 crore.
Provision for tax grew 85% to Rs 46.80 crore (tax incidence grew from 34.7% to 38.5%) after which PAT soared 57% to Rs 74.80 crore.
Prior period tax (PPT) credit was Rs 11.50 crore against Rs 4.60 crore. Thus net profit (after PPT adjustment) grew 65% to Rs 86.30 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 grew 24% to Rs 62.60 crore and accounted for 27% of sales. PBIT grew 80% to Rs 12.80 crore and accounted for 38% of total.
For the quarter, sales from the Hard Metals and Hard Metals Products fell 4% to Rs 169.20 crore and accounted for 73% of sales. PBIT from the same grew 9% to Rs 20.60 crore and accounted for 62% of total.
For FY 2019, sales from the Machining Solutions division grew 31% to Rs 159.70 crore and accounted for 17% of sales. PBIT from the same grew 107% to Rs 25.90 crore and accounted for 18% of total.
For FY 2019, sales from the Hard Metals and Hard Metals Products grew 14% to Rs 767.20 crore and accounted for 83% of sales. PBIT from the same grew 32% to Rs 121.20 crore and accounted for 82% of total.
Consolidated results
Quarter results
For June 2019 quarter, sales stood at Rs 250.10 crore. OPM stood at 14.6% which saw OP at Rs 36.40 crore.
Other income stood at Rs 1.70 crore. Interest cost was Rs 20 lakh.
As depreciation stood at Rs 7 crore, PBT stood at Rs 30.90 crore.
EO gain was NIL.
Provision for tax stood at Rs 9.40 crore after which PAT stood at Rs 21.50 crore.
Minority interest stood at Rs 90 lakh after which net profit stood at Rs 20.60 crore.
Consolidated FY 2019 results
In FY 2019, sales stood at Rs 945.20 crore. OPM stood at 15.4% which saw OP at Rs 145.20 crore.
Other income stood at Rs 10.50 crore. Interest cost was Rs 50 lakh.
As depreciation stood at Rs 28 crore, PBT stood at Rs 127.20 crore.
EO gain was NIL.
Provision for tax stood at Rs 48.30 crore after which PAT stood at Rs 78.9 crore.
Prior period tax credit stood at Rs 11.5 crore after which PAT after PPT stood at Rs 90.40 crore.
Minority interest stood at Rs 1 crore after which net profit stood at Rs 89.40 crore.
Markets served
The company serves markets like Automobile (2W, PV, LCV and MHCV) tractors, Aerospace, Defence and railways.
Other segments served are steel, capital investments in manufacturing (including greenfield activities), Oil & Gas Energy and Mining.
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 1078.
|