Kirloskar Oil Engines' initiatives are aligned with these areas, and the brokerage expect results to be visible over next few years. Motilal Oswal trims its estimates by 4%/6% for FY26/27 to bake in slightly lower margin and continue to value the company at 25 times Mar'27 earnings.
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Motilal Oswal Report
We recently interacted with the management of Kirloskar Oil Engines Ltd. to gain insights into the growth drivers for both B2B and B2C divisions. The company's performance during last quarter was impacted by low demand and its selective kVA focus in the powergen segment, as well as shifting of its facility for the B2C division.
Demand in the powergen segment has now started improving sequentially and operations have stabilized at the B2C division as well. Despite near-term volatility that may exist in the powergen marketdue to high base of last year and increased competition, we expect Kirloskar Oil Engines to benefit from-
a shift in focus towards mid to high kVA segments in powergen,
increased focus towards new areas in the industrial segment,
improved touchpoints in the distribution segment, and
better profitability of B2C division over next few years.
The company's initiatives are aligned with these areas, and we expect results to be visible over next few years. We trim our estimates by 4%/6% for FY26/27 to bake in slightly lower margin and continue to value the company at 25 times Mar'27 earnings.
Current stock price is factoring in extreme pessimism related to growth and margins, which we believe is unwarranted. We reiterate Buy with a revised SoTP-based target price of Rs 1,150.
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