Prabhudas Lilladher Initiates Coverage on Kirloskar Pneumatic Company with a Buy Recommendation, Target Price of Rs 1556

Kirloskar Pneumatic Company (KKPC) Research Report

Key Highlights:

• KKPC guides FY26 revenue at Rs18bn and FY27 at Rs21bn, with EBIT margins expected to remain at 20% despite macro uncertainties.
• Growth is driven by air compressors and the newly introduced Precision Engineering segment, which is expected to contribute 18% of revenue in FY27 (Rs4bn).

Business Segments:

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• Air Compressors: Growth is expected to be driven by the scaling of indigenously developed Tezcatlipoca, capacity ramp-up, and new product launches, including a low-range 800CFM centrifugal compressor targeting dry screw replacement.
• Refrigerant Segment: Moderating in FY27 with 7-8% YoY revenue growth due to the absence of large project orders, although the Zephyros presents a long-term structural opportunity with an addressable market of Rs50bn.
• Gas Compression Segment: Faces structural headwinds with limited near-term recovery visibility, prompting the company to reduce dependence and focus on selective opportunities.

Business Mix:

• KKPC is transitioning towards a more diversified and resilient business mix, with 80-82% coming from compressors and 18% from precision engineering.

Valuation:

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• The stock is currently trading at a PE of 24.1x/19.6x on FY27/28E.
• We maintain our 'BUY' rating, valuing the stock at a PE of 32x Sep'27E, arriving at a target price of Rs1,556.