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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.
Sales fall 5% and PAT falls 3% in March 2015 quarter
In the quarter ended March 2015, sales fell 5% to Rs 128.40 crore.
OPM fell 120 basis points to 9.0% which saw OP falling 16% to Rs 11.51 crore.
Other income jumped 99% to Rs 1.79 crore.
Interest cost was nil as the company is a debt free company.
As depreciation grew fell 6% to Rs 6.34 crore, PBT fell 11% to Rs 6.96 crore.
Provision for taxation fell 24% to Rs 1.85 crore after which PAT fell 3% to Rs 5.11 crore.
Nine months sales grew 4% and PBT rises 23%
During the nine months ended March 2015, sales grew 4% to Rs 412.43 crore.
OPM improved 60 basis points to 9.3% which saw OP growing 11% to Rs 38.56 crore.
Other income rose 13% to Rs 5.34 crore.
Interest cost was nil as the company is a debt free company.
As depreciation grew fell 1% to Rs 19.70 crore, PBT grew 23% to Rs 24.20 crore.
EO loss was nil against Rs 10.10 crore. Thus PBT after EO jumped 157% to Rs 24.20 crore.
Provision for taxation jumped 152% to Rs 6.56 crore after which PAT grew 158% to Rs 12.53 crore.
OPM impacted by CSR expenses and trade shows and exhibitions
Other expense for the quarter includes Rs 3.33 crore relating to trade shows and exhibitions incurred once in two years.
Other expense for the quarter also includes Rs 44.85 lakh towards expense incurred for Corporate Social Responsibility (CSR) expenses.
Thus OPM during the quarter and nine months was impacted to that extent.
Prospects have changed for the better
Automobile industry (especially M&HCV segment) is the key user industry for the company. After years of sluggish and negative growth rates, automobile industry is posting gradual recovery. Falling fuel prices and expected fall in interest rates and pick up in economy augur well for strengthening of this recovery in future. M&HCVs segment of the auto industry is also likely to post healthy growth rates.
Valuation
The share price trades at Rs 826.
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