KPT Industries, Daily – Breaking out of a consolidation on the daily. The big runup that caused this consolidation were last quarter results.
Monthly chart as well shows a nice consolidation and breakout ’18-’21 around 100 levels and ’21-’22 around 200 levels.
Currently trading at around 300+. Fundamentally, the business is into making power tools and blowers and seems to have been around doing the same. Around 2019 or so, they seem to have designed their own EV garbage collection cart. There hasn’t been much traction on this until last two quarters.
They have had a revenue of 5.12 Cr out of total topline of 37.36 Cr in Q2 (14%) which has grown to 13.27 Cr out of total topline of 44.55 Cr which is almost 30% topline contribution from their EV
The bottomline as well is healthy at 2.89 Cr from this revenue at a margin of almost 22%. There’s a healthy expansion of margins as well as compared to last quarter on their EV sales (8% last quarter), probably from operating leverage.
It is however not clear about the sustainability of numbers. If the Capital Employed numbers are anything to go by, assuming most of the increase is inventory, there’s a good correlation between CE and EV sales – 6.23 Cr CE lead to 5.12 Cr sales and 14.93 Cr to 13.27 Cr sales (closing vs subsequent quarter sales). This is of course very crude way of extrapolating but if right, the CE of 25.11 Cr should mean that the numbers could sustain or be even better.
The valuation is cheap at 12x TTM earnings and if numbers are sustainable it is definitely cheap. The return ratios are good as well at around 17%. The entire business is just around 100 Cr which isn’t bad for a business manufacturing precision power tools, engineering products and a home-grown EV. There was some info available on linkedin which shows their power tools manufacturing facility. There’s also a corporate film from 5 yrs back, so the business seems legit but this is no scuttlebutt. I felt at 100 Cr valuation with good sales, mainly from EVs, this was at least worth a look.
Disc: Have positions around 300-310 levels. Not sure of legitimacy or sustenance since very little is known about the business. Please do your due diligence.
| Subscribe To Our Free Newsletter |
