KSB nuclear order book and capacity expansion support medium-term earnings growth

Investment View and Business Profile

ICICI Securities’ August 20, 2026 result update retains a BUY recommendation on KSB Limited, supported by the company’s nuclear order book, expanding specialised pump capacity and diversified growth opportunities. The broker has set a target price of Rs 955.

KSB manufactures pumps and valves. Pumps contributed 82% and valves 18% of CY25 revenue, while domestic and export revenue accounted for 83% and 17%, respectively. The company has six manufacturing units in India, including five in Maharashtra and one in Tamil Nadu.

Weak Q2CY26 Financial Performance

KSB reported subdued Q2CY26 financial performance. Revenue increased 3.6% year-on-year to Rs 691 crore, but EBITDA declined 10.7% to Rs 82 crore and EBITDA margin contracted by 190 basis points to 11.8%. PAT declined 18.8% year-on-year to Rs 57 crore.

The Pumps business recorded 5.4% revenue growth, although its EBIT margin moderated to 11.2% from 11.6% in Q2CY25. The Valves business remained under pressure, with EBIT declining 74.7% year-on-year alongside the fall in revenue and margin.

Order Book and Nuclear Opportunity

Management reported total orders on hand of Rs 2,745 crore as of June 2026, compared with Rs 2,585 crore in December 2025 and Rs 2,250 crore in December 2024. The nuclear order book stood at Rs 1,235 crore and covers GHAVP Units 1 and 2, Kaiga Units 5 and 6, and Kudankulam projects.

H1CY26 order intake was Rs 1,550 crore, including around Rs 20 crore of nuclear orders. Excluding nuclear orders, intake was Rs 1,530 crore versus Rs 1,740 crore in H1CY25, reflecting softness in engineered and project orders. Export order intake was around Rs 200 crore.

Domestic intake was led by valves at 51%, followed by engineered pumps at 19%, standard pumps at 16% and SupremeServ at 14%.

The broker views nuclear as a source of medium-term visibility because standard projects have 24- to 36-month order-to-delivery cycles and substantial qualification barriers. KSB is executing indigenous primary coolant pumps for 700MWe GHAVP Units 1 and 2 and has progressed from imported pumps to localised manufacturing, including an indigenous 700MW PHWR boiler-feed pump.

Nuclear Execution and Capacity Expansion

GHAVP testing was paused because of issues with third-party test-bed equipment. Management expected resolution by the end of August 2026, with testing scheduled to resume in September 2026. New nuclear tenders, including Mahi Banswara and projects potentially spanning eight reactors, are expected over the next few months. KSB has also received a European nuclear export order for eight Critical Safety Class-2 pumps.

KSB is investing Rs 40 crore from internal accruals to expand Shirwal capacity by around 20%, from approximately 1,200 to 1,450 pumps annually. Completion is targeted in 2027, while the existing facility operates at around 90% utilisation. Management expects around Rs 100 crore of CY26 capex.

Growth Outlook and Catalysts

Management guides for 10% to 15% volume and revenue growth and an EBITDA margin of 13% to 14% in the near term. Key H2CY26 catalysts include:

• Recovery in exports.
• Conversion of the pending project pipeline.
• Recovery in the solar business.
• Resolution of GHAVP testing issues.

CY25 export revenue was Rs 470 crore, up 33% year-on-year. Management targets exports increasing from around 15% towards 20% of sales. SupremeServ is growing around 15% year-on-year. Data centres, water and wastewater, and marine are additional opportunities, with marine and data-centre applications estimated at around 3% to 5% of total project value.

Earnings Forecasts and Valuation

ICICI Securities forecasts revenue CAGR of 13% and PAT CAGR of 11.6% over CY25 to CY27E. Its CY26E and CY27E estimates are as follows:

The target price of Rs 955 is based on 45 times CY27E EPS.

Key Risks

• A slowdown in capital expenditure.
• Greater competition.
• Raw-material-price volatility.