Kirl. Brothers

Kirloskar Brothers reported a consolidated revenue of ₹1,116 crores for Q3 FY26, contributing to a 9M FY26 revenue of ₹3,123 crores. The company achieved an EBITDA of ₹161 crores in Q3 FY26, with a margin of 14.4%. For the nine-month period, EBITDA stood at ₹412 crores with a margin of 13.2%. The year-on-year moderation in EBITDA margin was primarily attributed to changes in product mix and adverse operating leverage.

The standalone performance was temporarily affected by an overall slowdown and delays in the release of Jal Jeevan Mission (JJM) funding to dealers, which held back dispatches and manufacturing. This resulted in an estimated revenue impact of ₹50-100 crores due to JJM issues. Additionally, ERP implementation hiccups in the foundry caused a temporary dip in casting production, impacting revenue by approximately ₹50 crores. Despite these challenges, demand in both small pumps and industrial segments remained healthy, and domestic subsidiaries registered a revenue growth of around 10% year-on-year.

International operations demonstrated strong growth, with the U.S. and Netherlands businesses delivering year-on-year growth of 15% and 155% respectively. South Africa also performed well in constant currency. However, U.K. operations experienced temporary softness and margin contraction due to uncertainty in the U.K. government's energy policies and high energy prices, which led to energy-intensive industries suspending production and impacting service contracts. The overall international order book remains robust, expanding 13% year-on-year to ₹1,289 crores.

The domestic order book stands at ₹2,438 crores, reflecting a strong 25% growth over the previous year. Despite the healthy order book, execution velocity was impacted, with the company managing to execute around 30% of its order book in the last three quarters, compared to a historical range of 34-40%. Management indicated that ERP-related issues in the foundry, which affected casting production and execution, were largely resolved by the end of Q3 FY26.

KBL is actively pursuing opportunities in the data center segment, leveraging its global approvals and collaborations with major consultants like AECOM. In the nuclear sector, the company expressed bullishness, having historically been involved in the secondary side and developing primary heat transfer pumps for fleet orders. KBL has also invested in developing two more types of primary circuit pumps, with a third expected soon, to capitalize on the significant opportunities in India's expanding nuclear power program.

Management reiterated its commitment to striving for double-digit growth. However, it emphasized a strategic prioritization of cash flow and profitability over short-term revenue targets. The company's diversified business model, robust order pipeline, and continuous focus on operational excellence are expected to drive sustainable and profitable growth in the coming periods, despite external challenges^🌐.