Multibagger - Kirloskar Brothers Limited (KBL) - technical analysis- 19 November 2008

Company Overview:
Established in 1888 and incorporated in 1920, Kirloskar Brothers Limited (KBL) is the flagship company of the Kirloskar group. The core businesses of KBL are large Infrastructure projects (Water Supply, Power Plants, Irrigation), Project and Engineered Pumps, Industrial Pumps, Agriculture and Domestic Pumps, Valves, Hydro turbines, Power Generation and anti Corrosion Products.

Stock Market Listing Details:

* PE Ratio: 8.74
* Market Capitalization: 962.5 Crores
* Beta:0.73
* One Year Return: -75.8%

Why Kirloskar Brothers is a good long term Investment:

* From a fundamental point of view KBL is a strong company with robust revenue growth over the past few years and overall strong fundamentals. The company is not highly leveraged and has a long term debt-equity ratio of just 0.08

* The company has generate positive operating cash flows for the last five years which is a good sign for any healthy company. Moreover last couple of years have also seen significant investments which will bring in future robust revenue growth

* Kirloskar Brothers products caters to some of the high growth industries from an Indian perspective such as Irrigation,water resource management, building and construction,energy, oil and gas, marine and defence. While in the near term all industries will slow the long term prospects of all these industries is bright and thus KBL will get business in a big way in the future as well

* Kirloskar Brothers acquired Gondwana Engineers, a company that specialises in water and wastewater treatment. This acquisition is a step towards company’s objective of becoming a complete water management solution provider company. This industry has huge growth prospects in India and KBl will benefit from the same The management of the company is one of the most important things to look into while selecting the company for long term investment. The Kirloskar management has proved its capabilities over time and all the Kirloskar group companies have done exceedingly well so far. This would give one confidence on that front as well. The management is also visionary as a result of which the company is positioning itself to make big plunges in very high growth sectors in the long term.
With a good order book, strong management,entry into right lines of business Kirloskar Brothers gives one a good long term investment option to consider. The stock is currently trading at a PE of 8.7 and while more downside cannot be ruled out in these markets accumulation in small numbers can be a good strategy for this stock.

Latest Positive News Related to Company:

* Kirloskar Brothers Ltd has informed that the joint venture formed by the Company viz. SCL-INDU-KBL-WEG, received contract from the Government of Andhra Pradesh. The total contract value is Rs 1446.48 crores and out of the total value, the Companys share is Rs 270 crores for electro mechanical work.

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