Kennametal India Limited

Industrials — Tools & Accessories · NSE

₹4,118.00−₹154.40 (−3.61%)

DalalBaazaar Score

72 / 100

🟢 Good

Verdict

NEUTRAL

Risk

Low

Driven by negative free cash flow, small-cap size, which brings sharper price swings.

In simple words: Strong business and financial position, with both sales and profits growing well. Cash generation is currently the main factor to watch.

Decision support, not a buy or sell call.

As of 18 Oct 2026, 7:02 pm

Understanding the Business

Company site ↗

The 60-second version of Kennametal India Limited — what it does, how it earns, and who it competes with, before any of the numbers below.

What does this company do?

Kennametal India Limited manufactures and trades in hard metal products and machine tools in the United States, Germany, China, India, Canada, Italy, France, Mexico, South Africa, Spain, the United Kingdom, and internationally.

IndustryTools & Accessories

SectorIndustrials

Employees773

Annual revenue₹1,511 Cr

How does it make money?

Turns over ₹1,511 Cr a year. Of every ₹100 of sales, about ₹13 reaches shareholders as profit, with ₹21 left at the operating level before interest, tax and depreciation. Each of its 773 employees supports ₹1.95 Cr of revenue a year, the signature of a capital- or asset-led business.

Revenue / employee₹1.95 Cr

Who are its competitors?

The closest listed comparisons in its industry are LARSEN & TOUBRO LTD., SIEMENS LTD, ABB INDIA LIMITED. These are the companies its valuation and returns are measured against elsewhere in this report.

Compared side by side in Peers ↓

What is its competitive advantage?The numbers suggest a real one

ROCE has stayed above 15% in every year available and stands at 31.2%. Returns that high normally get competed away; when they persist, something is protecting them, and its ROE of 24.5% against a peer median of 15.2% is consistent with that. What that something is — brand, scale, switching costs, regulation — the accounts cannot tell you.

Peer median ROE15.2%

What has been driving growth?

Sales and margins have both contributed to where profit is now. Over 3 years revenue moved +40% while net margin moved +59% relative to itself. What this cannot tell you is which products, customers or geographies did the work — that lives in the segment disclosures of the annual report.

Revenue effect+40%

Margin effect+59%

DalalBaazaar Score

72/ 100

Good

Weighted across six categories. Every point is explained below.

✗ P/E of 46.2x is demanding — it needs sustained high growth to justify
✓ P/E is 47% below its own historical median of 88.0x — cheap by its own standards
✗ P/B of 10.60x is a steep premium to book

Quality vs. Valuation

Company Quality

81/ 100

Excellent

How good the business is, ignoring the share price entirely.

Valuation

57/ 100

Fair

What you are being asked to pay, ignoring how good the business is.

A reasonable business at a reasonable price — neither the quality nor the valuation stands out in either direction.

Historical Valuation

Current P/E

46.2x

0.7Y Median

88.0x

8 monthly readings · mean 75.5x · range 58.2x–93.9x

Sector Median

88.8x

median of 3 sector peers

🟢Current valuation is approximately 47% below its 0.7y median of 88.0x. Cheaper than its own history, which is worth a reason too: the market may be pricing in something the backward-looking numbers do not show.

🟢Against its sector it trades 48% below the peer median of 88.8x.

vs. its own history

Cheap

88.0x median over 8 months · -47%

vs. sector peers

Cheap

88.8x median of 3 peers · -48%

vs. generic bands

Expensive

Above 35x

EV/EBITDA

28.6x

PEG

1.50

What's Good / What's Bad

🟢 What's Going Well7

Margins are improving
EBITDA margin is up from 14.4% to 20.8% over 3 years.
Debt is being paid down
Total debt is down 30% over 3 years.
Return on equity is rising
ROE has improved from 12.7% to 23.0%.
Return on capital is rising
ROCE has improved from 16.9% to 31.2%.
High return on capital employed
ROCE of 31.2% is the mark of a business that converts capital into profit efficiently.
Very low debt
Debt/Equity of 0.22x leaves the balance sheet with plenty of headroom.
Consistently profitable
Profitable in every one of the last 4 reported years.

🔴 What Needs Attention0

Nothing stands out as clearly deteriorating on the years of data available.

Red Flags

4 items require attention · 2 high · 2 watch

🔴Profit up while operating cash flow fallsFinancial
Reported profit rose but cash generated by operations declined — worth checking whether earnings are being supported by non-cash items or working capital.
🔴Inventory building faster than salesFinancial
Inventory up 149% against revenue up 40% — stock may not be moving.
🟡Free cash flow is negativeFinancial
Free cash flow was -₹35 Cr in the latest year.
🟡Receivables growing faster than salesFinancial
Receivables up 90% against revenue up 40% — sales are being booked faster than they are collected.

Investment Thesis

🟢 Bull CaseWhat could make this work?

Capital compounds at a high rate
ROCE of 31.2% means each rupee reinvested earns well above what capital costs. If the company can keep deploying at this rate, growth creates value rather than just consuming cash.
Margin expansion has further to run
EBITDA margin has risen from 14.4% to 20.8%. If that holds, profit compounds faster than sales and today's multiple looks cheaper in hindsight than it does now.
Deleveraging frees up earnings
Debt is down 30% over 3 years. Every rupee of interest not paid drops to the bottom line, so profit can grow even if revenue does not.
Priced below its own history
The stock trades 47% below its own median multiple. If the business performs as it has and simply re-rates back to normal, that gap is return on its own.
Cheaper than its peers
It trades 48% below the sector median. Either the market sees a problem the numbers do not show, or the discount closes.

🔴 Bear CaseWhat could go wrong?

Sales are being booked faster than collected
Receivables are up 90% against revenue up 40%. If customers keep taking longer to pay, reported profit will not turn into cash — and write-offs follow if some never do.
Size brings its own risk
Small Cap businesses are thinly traded, so exits are harder in a falling market and single events move the price more than they would for a larger company.
Several serious flags at once
2 high-severity checks triggered. Individually each has an explanation; together they raise the chance that something structural is wrong rather than a one-off.

🟡 Key Things to WatchMeasurable tripwires, set against where this company stands today

1Revenue growth stays above 9% a year✓ 12.0% CAGR
Latest reported year was 47.7%. The bar is set below the established compounding rate, so ordinary variation does not trip it.
2EBITDA margin holds above 19%✓ 20.8%
Two points below today's level — enough room for noise, tight enough to catch real compression.
3Free cash flow remains positive✗ -₹35 Cr
Profit that never becomes cash eventually stops being profit.
4Debt / EBITDA stays below 2x✓ 0.0x
The ratio lenders write covenants against; it survives a small or negative equity base, unlike Debt/Equity.
5ROCE stays above 28%✓ 31.2%
Falling returns on capital are usually competition arriving, and show up here before they reach the margin.

Investment Checklist

9 / 11 checks passed

✓ Strong return on equity (ROE ≥ 15%)
✓ Strong return on capital employed (ROCE ≥ 15%)
✓ Healthy net margin (≥ 10%)
✗ Generates positive free cash flow
✓ Manageable leverage (Debt/Equity < 1.0)
✓ Adequate short-term liquidity (Current Ratio ≥ 1.0)
✓ Revenue growing year-over-year
✓ Profit growing year-over-year
✗ Not trading at an extreme valuation (P/E < 40x)
✓ Not buying right at the 52-week high
✓ Short-term technical trend isn't bearish

Price history

Quick Metrics

6 good · 2 neutral · 3 weak

Market Cap

₹9,051 Cr

Small Cap

Smaller company — thin liquidity and deep drawdowns are normal here

P/E (Trailing)

46.2x

Expensive

Expensive — verify against sector peers

P/B Ratio

10.60x

Rich

Steep premium to book — needs high, durable returns to justify

EPS (TTM)

₹89.18

Profitable

Profitable on a per-share basis

ROE

24.5%

Strong

Strong capital efficiency

ROCE

31.2%

Strong

Earns comfortably above its likely cost of capital

Debt/Equity

0.22x

Low

Conservative leverage

Revenue Growth (YoY)

47.7%

Healthy

Healthy top-line growth

Profit Growth (YoY)

184.1%

Healthy

Profits growing at a healthy clip

Dividend Yield

0.97%

Modest

Small cash return — most of the return has to come from the price

Free Cash Flow

-₹69 Cr

Cash burning

Spending more cash than the operations bring in

More Metrics

P/E (Forward)

56.6x

Flat

At or above the trailing multiple — no earnings uplift is being priced in

ROA

14.2%

Good

Assets are working hard

Operating Margin

23.9%

Good

Healthy core-business profitability

Net Margin

13.0%

Good

Strong bottom-line conversion

Current Ratio

2.35

Comfortable

Healthy short-term liquidity

Beta (vs Nifty)

0.50

Defensive

Steadier than the market

52W Range Position

63%

Mid-range

Technical Snapshot

SMA 20 / SMA 50

4234.4 / 4161.8

Bullish alignment (short > long)

RSI (14)

47.3

Neutral momentum

Financial Trend (4-Year)

Metric	FY23	FY24	FY25	FY26	3Y CAGR
Revenue	₹1,076 Cr	₹1,100 Cr	₹1,170 Cr	₹1,511 Cr	+12.0%
EBITDA	₹155 Cr	₹183 Cr	₹187 Cr	₹315 Cr	+26.6%
EBITDA Margin	14.4%	16.6%	15.9%	20.8%	—
PAT (Net Profit)	₹88 Cr	₹111 Cr	₹103 Cr	₹196 Cr	+30.7%
EPS	—	₹50.28	₹46.82	—	—
ROE	12.7%	15.1%	13.8%	23.0%	—
ROCE	16.9%	20.6%	18.8%	31.2%	—
Total Debt	₹3 Cr	₹3 Cr	₹3 Cr	₹2 Cr	-11.1%
Free Cash Flow	₹68 Cr	₹85 Cr	₹114 Cr	-₹35 Cr	—

🟢 Revenue has grown at 12.0% a year over 3 years.

🟢 EBITDA has grown at 26.6% a year over 3 years.

🟢 EBITDA Margin has risen from 14.4% to 20.8% over 3 years (+6.4 pts).

🟢 PAT (Net Profit) has grown at 30.7% a year over 3 years.

🟢 ROE has risen from 12.7% to 23.0% over 3 years (+10.2 pts).

🟢 ROCE has risen from 16.9% to 31.2% over 3 years (+14.3 pts).

🟢 Total Debt has shrunk at 11.1% a year over 3 years.

🔴 Free Cash Flow has turned negative, from ₹68 Cr to -₹35 Cr.

Balance Sheet & Cash Flow — FY2026

Total Assets

₹1,265 Cr

Total Liabilities

₹411 Cr

Cash & Equivalents

₹46 Cr

Operating Cash Flow

₹18 Cr

Capex

-₹54 Cr

Shareholding (proxy)

Institutional Holding

12.1%

Insider Holding

75.0%

Corporate Actions

Dividend Rate

₹40

Ex-Dividend Date

15 May 2026

Peer Comparison

Company	P/E	ROE
LARSEN & TOUBRO LTD.	30.1x	15.2%
SIEMENS LTD	88.8x	10.5%
ABB INDIA LIMITED	92.6x	19.1%

Recent News

2 positive2 mixed2 general

Kennametal India Share Price

Upstox, 16 Oct

Kennametal India Share Price rises on intraday price action

Univest, 14 OctPrice move

🟡Mixed / dependsA price move, which is not by itself a change in the business. Worth finding the cause before reading it as either good or bad.

Kennametal India Limited (NSE:KENNAMET) Goes Ex-Dividend Soon

Simply Wall Street, 12 MayCapital return

🟢Potentially positiveCash or shares returned to holders. A buyback is only good value if the shares were cheap when bought.

Kennametal India Reports Q1 Revenue of 4.78B Rupees and Standalone Net Profit of 888M Rupees

Sahi, 13 AugResults

🟡Mixed / dependsA results event. The figures on this page update once the new statements reach the data feed, which usually lags the announcement.

Kennametal India Q3 revenue jumps 39% to Rs 403 crore, net profit doubles to Rs 51 crore

The Economic Times, 07 MayResults

🟢Potentially positiveReported improvement. Check whether it came from volume, price or a one-off item before treating it as a trend.

Kennametal India Share Price: 52-week high and valuation

Univest, 28 Aug

Watch Items

Cross-check against the company's latest quarterly filing / investor presentation before acting.

DalalBaazaar Thesis

StrongBusiness Quality · Financial Health · Growth · Profitability

MiddlingRisk

WeakValuation

Points for each in the Score ↑

Good business at a fair price

A sound business at a reasonable valuation. Suitable for a long-term holding, with the valuation and the direction of margins worth watching rather than the business itself. 2 high-severity red flags sit above this conclusion and should be read first.

1 of 5 tripwires tripped — Free cash flow remains positive · see Key things to watch ↑