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Hidden Gem - KSB Target Price 965

ICICIdirect Research 20 Dec 2024 DISCLAIMER

KSB looks well positioned to benefit significantly from strong capex outlook in infrastructure and industrial segments like refineries, petrochemicals, pharmaceuticals, chemicals, power, nuclear, steel, cement, irrigation, waste water and construction 

Domestic demand during this year has been better, led by standard pumps segment which is 50-60% of total revenue. However, exports revenue was impacted due to geopolitical issues which impacted the overall revenue growth in 9MCY24. 
 
9MCY24 revenue growth stood at ~10% YoY but management has maintained its guidance of 15%+ YoY revenue growth for CY24E. This implies ~25% YoY revenue growth in Q4CY24E 
Company’s order backlog stands healthy at ~Rs 2400 crore, of which 50% is from nuclear segment where significant execution pick-up is yet to take place 

Overall revenue growth visibility remains strong for CY25E & CY26E, considering the execution pick-up in nuclear & projects segment and recovery in exports 

Margins are also expected to improve, led by increasing share of after-market segment and steady growth in standard pumps segment 

We estimate revenue CAGR of ~16% over CY23-26E while PAT CAGR of ~21% over the same period 

Valuation at 36x P/E on CY26E earnings look attractive considering the strong growth outlook. We have a target price of Rs 965 on the company

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