KSB Limited
Q2 FY25
Call date · August 22, 2025

1 · Management Commentary

Key Positives

  • Strong order intake in H1 CY25: ₹17,381 million, with total orders on hand at ₹26,969 million as of June 2025.
  • Revenue, PAT, and EBITDA CAGRs of 16%, 20%, and 18% respectively; net worth at ₹14,737 million.
  • Nuclear business order book robust at ₹13,131 million; solar business showing rapid growth with YTD June sales of ₹134.3 crore.
  • Export performance maintained at ~15% of revenue, with healthy absolute growth (expected to cross ₹400–450 crore).
  • Significant progress in ESG: 68% renewable electricity share in Q2 2025.
  • Expansion into new segments: mining, firefighting, marine, mechanical seals, and vertical turbine pumps.
  • Shirwal plant awarded 3 Star MBK certification, one of only three KSB sites globally.

Key Negatives

  • Solar business working capital cycle remains elevated (>120 days), though management expects improvement.
  • Pricing pressure in solar segment, with ~10% price reduction in recent tenders.
  • FGD segment has “vanished overnight” due to regulatory changes, impacting that business line.
  • Nuclear export order value not disclosed due to NDA.

Forward Guidance

  • Capex: Ongoing investments of ₹120–130 crore+ per year for capacity and technology upgrades; new sheds at Sinnar and Shirwal to be ready by March.
  • New products: Continued backward integration in solar (controllers), expansion in mechanical seals, mining, firefighting, and marine pumps.
  • Client wins: L&T supercritical order, new nuclear orders (Kaiga 5&6, Kudankulam), and entry into European nuclear export market.
  • Revenue/margin outlook: Solar and nuclear to contribute a “much better share” of revenue in coming years; non-nuclear/non-solar business growing at ~15%.
  • Strategic initiatives: Aggressive participation in solar tenders (Component B & C), focus on export growth, and ongoing evaluation of inorganic opportunities (BP&CL acquisition cited as successful).

2 · Q&A Highlights

Q 1 (Composite): What is the contribution and outlook for nuclear and solar segments, and can they reach 20%+ of revenue in 3 years?
A (Management):
• Solar revenue last year: ₹190 crore; nuclear invoicing to start this year.
• Both segments expected to grow faster than core business; 20%+ share possible but not committed.
• Nuclear order book of ₹1,300 crore to convert to sales over 2–3 years.

Q 2 (Composite): Impact of solar/nuclear growth on working capital and return ratios?
A (Management):
• Nuclear contracts have milestone payments, remain cash positive.
• Solar working capital cycle >120 days but expected to improve as processes are streamlined; manageable with internal accruals.

Q 3 (Composite): Growth and competition in non-solar/non-nuclear business; export outlook?
A (Management):
• Non-nuclear/non-solar business growing ~15% in H1; strong order intake in water, building services, industrial, and aftermarket.
• Export revenue absolute value growing healthily; expected to cross ₹400–450 crore, with potential to reach ₹1,000 crore in 5 years.

Q 4 (Composite): Nuclear export order details and future export opportunities?
A (Management):
• Value of current export order not disclosed due to NDA.
• More export opportunities possible as projects progress; all exports routed via KSB principals.

Q 5 (Composite): Solar business scalability, pricing, and margin outlook; plans for Component C?
A (Management):
• Solar pricing under pressure (10% drop in recent tenders); margins not explicitly disclosed.
• Focus on expanding into Component C (replacement market) and more aggressive tender participation; internal cash funding preferred over borrowings.

Q 6 (Composite): Capacity/resource requirements for upcoming growth; attrition and skill development?
A (Management):
• Ongoing investments in capacity and technology; focus on skill development and retention (attrition ~9–10%).
• New sheds and machinery upgrades at Sinnar and Shirwal plants.

Q 7 (Composite): Product additions and new segment expansion (mining, firefighting, marine, mechanical seals)?
A (Management):
• Continuous product additions in all segments; mining foundry now localized, vertical turbine pumps for water projects, and expansion in mechanical seals and marine.

Q 8 (Composite): BP&CL acquisition learnings and future inorganic growth?
A (Management):
• Acquisition financially successful; integration challenges mainly around legacy documentation.
• Open to future inorganic opportunities.

3 · Other Key Numbers

  • Employees: 2,170 as of June 2025.
  • Net financial position: ₹316 crore cash as of June 2025.
  • Dividend: 200%.
  • ROCE: 23.42% as of December 2024.
  • Nuclear business order book: ₹1,313 crore.
  • Solar business YTD June 2025: Order intake ₹125.1 crore; sales ₹134.3 crore; 13,227 systems ordered, 10,613 installed.
  • Orders on hand (June 2025): ₹13,836 million (non-nuclear), ₹13,131 million (nuclear), total ₹26,969 million.
  • H1 CY25 order intake: ₹17,381 million.
  • Export share: ~15% of revenue; absolute export revenue last year ~₹350 crore, expected to cross ₹400–450 crore.
  • Shirwal plant: 80% green energy usage; 1 MW rooftop solar.
  • Attrition rate: ~9–10%.
  • Residential pump business: 8–10% of revenue, aiming to double in 3 years (current value ₹200–250 crore).
  • Capex: ₹120–130 crore+ per year.
  • Mechanical seals: 9,000 units/year, 90% localized.
  • Solar business: 32 installers in Maharashtra, 132 authorized service centers, 5-year warranty for PM Kusum scheme.
  • Nuclear pump opportunity: Two units together ~₹500–600 crore.
  • FGD segment: Business “vanished overnight” due to regulation.
  • MBK 3 Star certification: Shirwal one of three KSB sites globally.
  • Working capital cycle (solar): >120 days currently, targeted to reduce below 120 days.
  • No borrowings anticipated; growth to be funded via internal accruals.
  • No value disclosed for nuclear export order due to NDA.

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