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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.
December 2015 quarter results
In quarter ended December 2015, sales grew 1% to Rs 144.03 crore.
OPM fell 150 basis points from 9.5% to 8.0% which saw OP fall 15% to Rs 11.53 crore.
Other income grew 28% to Rs 1.63 crore.
Interest cost was nil as the company is a debt free company.
As depreciation fell 10% to Rs 6.03 crore, PBT fell 13% to Rs 7.13 crore.
Provision for taxation fell 5% to Rs 2.12 crore after which PAT fell 17% to Rs 5.01 crore.
Six months results
For the six months ended December 2015, sales fell 4% to Rs 271.42 crore.
OPM fell 260 basis points from 9.8% to 7.2% which saw OP fall 30% to Rs 19.66 crore.
Other income grew 45% to Rs 3.89 crore.
Interest cost was nil as the company is a debt free company.
As depreciation fell 10% to Rs 11.98 crore, PBT fell 33% to Rs 11.57 crore.
Provision for taxation fell 34% to Rs 3.09 crore after which PAT fell 32% to Rs 8.48 crore.
Quarter Segment results
For the quarter, sales from the Machine Tools grew 18% to Rs 28.24 crore and accounted for 20% of sales. PBIT from the same fell 12% to Rs 2.84 crore and accounted for 23% of total.
For the quarter, sales from the Hard Metals and Hard Metals Products fell 3% to Rs 115.79 crore and accounted for 80% of sales. PBIT from the same fell 11% to Rs 9.67 crore and accounted for 77% of total.
For the six months, sales from the Machine Tools grew 4% to Rs 44.78 crore and accounted for 16% of total. PBIT from the same crashed 67% to Rs 1.64 crore and accounted for 8% of total.
For the six months, sales from the Hard Metals and Hard Metals Products fell 6% to Rs 226.64 crore and accounted for 84% of sales. PBIT from the same fell 14% to Rs 20.11 crore and accounted for 92% 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 720.
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