Kirloskar Pneumatic Company: Target Price Set at Rs 1,715 by Prabhudas Lilladher

Kirloskar Pneumatic Posts Strong Quarter, Maintains Growth Momentum

Kirloskar Pneumatic Company (KKPC) has delivered a robust performance in the recent quarter, driven by a favorable product mix, backward integration initiatives, and the execution of higher-margin packages. The company's revenue growth stood at 20.3% year-over-year (YoY), while its EBITDA margin reached 26.1%.

The air compressors segment, accounting for approximately 18% of KKPC's revenue, remains a key growth driver. This is attributed to the continued ramp-up of the Tezcatlipoca project, new product launches such as the oil-free Hydrino compressor, and healthy order inflows from the pharma, tyre, and textile segments. The refrigeration segment is gaining traction, with improving acceptance of the Khione product and the upcoming commercialization of Zephyros in Q1FY27. However, the focus is initially on volumes.

In contrast, the gas compression segment is witnessing a gradual recovery, with improving order finalization. The Precision Engineering segment is emerging as an incremental growth lever, with strong order inflows. The company's order book remains healthy at approximately INR18.6bn, with a significant portion of it expected to be executed in FY27.

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The company's stock is currently trading at a price-to-earnings (P/E) ratio of 31.7x/27.0x on FY27E/FY28E. With the outlook remaining positive, we maintain a 'Buy' rating for the stock, with a target price of Rs1,715 (Rs1,556 earlier). This valuation is based on a P/E ratio of 32x Mar'28E (32x Sep'27E earlier).