Anand Rathi
KSB (Buy)
Target: ₹1,008
CMP: ₹810.55
In the next 2-5 years, a vast number of opportunities are under way for KSB , especially in FGD, nuclear power (NPCIL), and O&G. Export opportunities, too ,are good, aided by a strong parent, technology and cost competitiveness. We believe the company is poised to explore these opportunities, given its strong operations and execution capabilities. Also, such opportunities will significantly boost its service business (15 per cent).
We introduce CY22 and expect 16 per cent/23 per cent revenue/PAT growth.
With capacity installed ahead of competition and pre-qualification in place, we expect sound opportunities from the FGD, nuclear and O&G sectors. NPCIL announced 12 reactors (700MW each) a ₹300 crore opportunity per unit by 2031. FGD coupled with the Atma Nirbhar vision is perceived as the biggest opportunity. Stabilising crude oil prices would lead to capex by oil producers. Agriculture, "smart" cities and waste-water management also throw up healthy prospects. Expectations of a pick-up in awarding orders, backed by its strong parent and execution ability, augur well for the stock. We upgrade it to ‘Buy’, with a target price of ₹1,008.
Risks: More-than-expected delay in order awarding.