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In the quarter ended March 2010, Kennametal India's net profit reported outstanding growth of 597% to Rs 13.94 crore thanks to robust operating performance and marginal increase in depreciation cost though limited by increase in effective tax rate. The company's topline grew by robust 62% to Rs 98.72 crore backed by both segments especially hard metal segment. Increase in OPM by 15.5% and marginal depreciation cost boosted the PBT by whopping 641% to Rs 20.61 crore. However growth in net profit was limited to though by significant 597% to Rs 13.94 crore due to high effective tax rate.
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 62% to Rs 98.72 crore backed by both the segments especially hard metals and hard metal products segment (hard metal segment). The hard metal segment's sales grew by impressive 65% to Rs 86.90 crore contributing 88% to total. Also the sales of machine tools grew by robust 42% to Rs 11.82 crore. Increase in operating profit margin (OPM) by whopping 1550 bps to 22.4% boosted the operating profit by outstanding 426% to Rs 22.15 crore. In terms of cost, as % to sales net stock adjusted, the raw material cost spurted by 330 bps to 22%. Also the cost of traded goods increased by 130 bps to 16%. However other expenditure and staff cost crashed by 480 bps to 22% and whopping 1360 bps to 18% respectively.
Segmentwise, the PBIT margin of hard metals grew by impressive 1910 bps to 29% lifting its PBIT by whopping 394% to Rs 24.90 crore. Also the PBIT margin of machine tools segment grew by impressive 1850 bps to 23% boosting its PBIT by outstanding 650% to Rs 2.70 crore.
PBT spurted by substantial 641% to Rs 20.61 crore thanks to marginal growth in depreciation cost. The depreciation cost grew by marginal 8% to Rs 5.21 crore. The interest cost grew by whopping 175% to Rs 0.11 crore. Only the other income played spoil sport with marginal 10% growth to Rs 3.78 crore. Increase in effective tax rate by 430 bps restricted the growth in net profit though by outstanding 597% to Rs 13.94 crore.
Nine Month Performance
In the nine month ended March 2010, the company's topline grew by marginal 10% to Rs 264.34 crore driven by marginal sales growth of hard metal and downfall in machine tools sales. The machine tools sales slipped by 20% to Rs 32.32 crore while the hard metals sales grew by marginal 16% to Rs 232.02 crore. However increase in OPM by whopping 770 bps to 23.3% boosted the operating profit by impressive 64% to Rs 61.54 crore.
Segmentwise, the PBIT margin of hard metals grew by 810 bps to 29% improving its PBIT by impressive 62% to Rs 66.15 crore. The PBIT margin of machine tools segment grew by 110 bps to 14% limiting the fall in its PBIT by 13% to Rs 4.62 crore.
The PBT grew by robust 63% to Rs 55.31 crore thanks to marginal growth in depreciation cost and fall in interest cost. The depreciation cost grew by marginal 10% to Rs 15.28 crore while the interest cost crashed by whopping 77% to Rs 0.13 crore. Only the other income played spoil sport with 16% decline to Rs 9.18 crore. On accounting tax provision, the net profit settled with impressive 63% growth to Rs 37.50 crore.
The promoters' share in the total shareholding remains unchanged at 88.16% in March 2010 quarter. The promoters' have pledged ‘nil' shares of the company.
Currently the scrip is trading at Rs 397.50 on BSE.
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