KENNAMET - Kennametal India

📊 NSE: KENNAMET 🏢 Castings & Forgings 📅 Last Updated: 12/14/2025 8:52

💰 Financial Performance

Revenue Growth by Segment

Total operational revenue reached INR 11,703 million in FY25, representing a 6.4% YoY growth. The Hard Metal segment saw profit growth driven by better plant capacity utilization and favorable raw material costs, while the Machining Solutions Group (MSG) reported higher sales but lower profitability due to an unfavorable product mix and increased marketing spends.

Geographic Revenue Split

The company maintains a mix of domestic and international revenue. Domestic demand remained sustained, but exports faced significant headwinds, dropping approximately 15-16% due to global economic uncertainties and geopolitical tensions.

Profitability Margins

Operating Profit Margin stood at 12% in FY25, down from 13% in FY24 (a 5% decline). Net Profit Margin was 9% in FY25 compared to 10% in FY24, representing a 13% decrease primarily due to the absence of one-off exceptional interest income from tax refunds present in the previous year.

EBITDA Margin

Not explicitly disclosed as a standalone EBITDA figure, but Profit Before Tax (PBT) and exceptional items was INR 1,402 million, a marginal increase of 1.15% YoY, indicating stable core profitability despite rising operational costs.

Capital Expenditure

Not disclosed as a specific INR figure in the provided documents, though the company emphasized investments in 'fit-for-market' product development and digital compliance mapping systems.

Credit Rating & Borrowing

The company maintains a healthy cash position and met all financial requirements through internal accruals; specific credit ratings and interest rate percentages were not disclosed.

⚙️ Operational Drivers

Raw Materials

Hard metal inserts and specialized raw materials for cutting tools; raw material costs were noted as 'favorable' in FY25, contributing to Hard Metal segment profitability.

Import Sources

A significant portion of Kennametal branded inserts are imported from global facilities to maintain technology standards, while Widia branded products are increasingly localized in India.

Key Suppliers

Not specifically named, though the company coordinates procurement through its ultimate holding company, Kennametal Inc., and utilizes Ernst and Young (E&Y) India for internal audit monitoring of supply chain controls.

Capacity Expansion

Current capacity utilization improved in the Hard Metal segment during FY25; specific MTPA or unit capacity figures for planned expansions were not disclosed.

Raw Material Costs

Raw material costs were favorable in FY25, helping offset other operational expenses. The company utilizes a strategy of localizing high-volume, steady-market applications to reduce import costs and improve margins by 2-3% through volume leverage.

Manufacturing Efficiency

Efficiency is driven by the 'Brand Strategy' and digital mapping of stakeholder tasks. MSG business is noted as manpower intensive, where higher volumes are required to achieve better operating leverage.

Logistics & Distribution

Not disclosed as a specific percentage of revenue, though the company noted that global supply chain decisions are made by the parent company based on plant technology and cost positions.

📈 Strategic Growth

Expected Growth Rate

6.40%

Growth Strategy

Growth will be achieved through a 'Brand Strategy' targeting three market tiers: full solution, performance, and performance value. The company is diversifying into high-growth sectors like Aerospace & Defense (5.1% growth) and Infrastructure (9.4% growth) while launching 'fit-for-market' products developed regionally to optimize the product mix.

Products & Services

Cutting tools, hard metal inserts, machining solutions, tool and grinding machines, and CNC machines.

Brand Portfolio

Kennametal, Widia.

New Products/Services

Launched several products for General Purpose Machining and expanded the Tool & Grinding machines range; specific revenue contribution percentages for these new launches were not disclosed.

Market Expansion

Expanding footprint in domestic MSME, Medical, and Aerospace segments to offset external economic slowdowns.

Market Share & Ranking

The company claims a dominant position in specific applications, reaching up to 90% share where their brand is technically superior, though overall industry ranking was not specified.

Strategic Alliances

Operates as a 75% subsidiary of Kennametal Inc. (USA), which provides global technology, R&D support, and supply chain integration.

🌍 External Factors

Industry Trends

The industry is seeing a shift toward CNC growth (upward of 40% in some segments) and increased demand in Aerospace and Defense. Kennametal is positioning itself by blending global innovations with regional 'fit-for-market' products.

Competitive Landscape

Competes with both local and global cutting tool manufacturers; management avoids disclosing specific margin spreads to protect 'competitive intelligence'.

Competitive Moat

The moat is sustained by technical superiority in specific applications (90%+ share), the dual-brand strategy (Kennametal and Widia), and direct reporting/access to the US parent's global technology and supply chain.

Macro Economic Sensitivity

Highly sensitive to global economic growth (expected to remain tepid in 2026-27) and domestic industrial growth in sectors like Infrastructure (9.4%) and General Engineering (9.6%).

Consumer Behavior

Shift toward comprehensive solutions and standard products that span a wider customer base in the General Purpose Machining market.

Geopolitical Risks

Geopolitical events are cited as a primary reason for a cautious outlook and were responsible for the 15-16% drop in export performance.

⚖️ Regulatory & Governance

Industry Regulations

Complies with SEBI (Prohibition of Insider Trading) Regulations and the Companies Act 2013. The company uses a digital compliance system to map all legal tasks to functional heads.