Kirloskar Brothers Limited — Q3 FY26 earnings call

Call held 6 Feb 2026

Management summary

Kirloskar Brothers reported a consolidated revenue of ₹1,116 crores for Q3 FY26 with an EBITDA margin of 14.4%. While domestic revenue was impacted by ₹50-100 crores due to JJM funding delays and ₹50 crores from temporary ERP issues, the domestic order book grew 25% YoY. International business showed strong growth in the U.S. and Netherlands, though the U.K. faced softness. The company remains optimistic about future growth, focusing on new opportunities in data centers and nuclear power, while prioritizing cash flow and profitability.

Highlights

  • Consolidated revenue for Q3 FY26 was ₹1,116 crores, and for 9M FY26, it was ₹3,123 crores.

  • Domestic order book grew by a strong 25% over the previous year to ₹2,438 crores, indicating sustained customer confidence.

  • International order book expanded 13% year-on-year to ₹1,289 crores, with U.S. operations growing 15% and Netherlands operations growing 155% year-on-year.

  • The company is bullish on nuclear opportunities, having developed primary heat transfer pumps and investing in two more types for the primary circuit, with one more expected soon.

  • Small pump segment grew by 10% year-on-year, outperforming competitors in the KUSUM program.

Concerns

  • JJM funding delays from state governments led to an estimated revenue reduction of ₹50-100 crores in Q3 FY26.

  • ERP implementation hiccups in the foundry temporarily reduced casting production from 700 to 200-300 units per day, impacting revenue by approximately ₹50 crores.

  • U.K. operations faced temporary softness and margin contraction due to uncertainty in energy policies and high energy prices, impacting service contracts with energy-intensive industries.

  • Execution velocity for the order book was around 30% in the last three quarters, lower than the historical 34-40%.

Key financials

2 periods

Headline

  • Consolidated Revenue
    ₹1,116 Cr
  • Consolidated EBITDA
    ₹161 Cr
  • Consolidated EBITDA Margin
    14.4%

9M

  • FY26 Consolidated Revenue
    ₹3,123 Cr
  • FY26 Consolidated EBITDA
    ₹412 Cr
  • FY26 Consolidated EBITDA Margin
    13.2%

What they filed

Q1 FY27: revenue up 12.9%, net profit up 0.0% against the same quarter last year.

₹ Cr · quarterly
Line itemQ2 FY25Q3 FY25Q4 FY25Q1 FY26Q2 FY26Q3 FY26Q4 FY26Q1 FY27
Revenue1,036 1,144 1,281 979 1,028 −1%1,116 −2%1,415 +10%1,105 +13%
EBITDA142 166 190 112 108 −24%142 −14%182 −4%116 +4%
Net profit97 118 138 68 72 −26%125 +6%112 −19%68 +0%
How to read this

₹ crore, as filed. The percentage beside a figure is the change against the same quarter a year earlier — never the quarter before, which would make every seasonal business look like it collapses and booms each year.

Segment breakdown

  • Domestic Subsidiaries
    0.1 yoy_pct Revenue Growth
  • U.S. Operations
    0.15 yoy_pct Revenue Growth
  • Netherlands Operations
    1.55 yoy_pct Revenue Growth

Order book

high confidence

Total value

₹3,727 Cr

as of 2025-12-31 quantified

Execution

Managed to execute around 30% of the order book in the last three quarters, compared to historical 34-40%.

Composition

Mix 2 geographies
  • Domestic 65.4%
  • International 34.6%

Share of order book by geography

Underlying business fundamentals remain strong with healthy order inflows across both domestic and international markets, reflecting continued customer trust and demand momentum.

Source: Prepared remarks

Capital allocation

medium confidence
  • Capex Capex disclosed
    • R&D investment
    The company has invested by itself because you know the company invests close to 2% of its turnover on R&D every year.

Guidance & targets

Revenue

  • Revenue Growth Revenue · FY26 · Medium confidence Double-digit growth
    I have said that we will always try to go for double-digit growth. But as you may be aware, we place priority on cash flow, profitability and revenues in that order.

    — Sanjay Kirloskar

  • Revenue Growth Revenue · Ongoing · Medium confidence Double-digit growth
    You are asking me to make a forward-looking statement. I will continue with my statement that we will strive for double-digit growth.

    — Sanjay Kirloskar

What to watch in Q4 FY26

Foundry ERP Performance & Execution Velocity

Next quarter (Q4 FY26)
Current Dipped to 200-300 castings/day (from 700), impacting ~₹50cr revenue. Execution velocity ~30% of order book.
Target Reverted to 700 castings/day, improved execution velocity (above 30%).

Why it matters

Direct impact on revenue recognition and operational efficiency, especially for small/medium pump segments.

I can report over here that by the end of last quarter, the system is performing much better because now we are able to identify waste and also reduce costs.

Risks & concerns

  • Jal Jeevan Mission (JJM) funding delays from state governments

    high

    State governments delaying funds for JJM, impacting KBL's dealers and causing an estimated ₹50-100 crores revenue reduction.

    Management acknowledged

  • ERP implementation issues in foundry

    medium

    Temporary hiccups in SAP ERP system caused casting production to dip, leading to an estimated ₹50 crores revenue impact, though largely resolved by quarter-end.

    Management acknowledged

  • Temporary softness in UK operations due to energy policies and high energy prices

    medium

    Uncertainty in UK government energy policies and high energy prices led to major industries suspending production, impacting KBL's service contracts and margins in the region.

    Management acknowledged

  • Seasonality of revenue recognition

    low

    Company's revenue recognition is historically skewed towards Q4, making quarter-on-quarter comparisons less indicative of full-year performance.

    Management acknowledged

Q&A highlights

8 direct
H2 FY26 revenue growth expectations and historical seasonality Direct
We have always said don't look at us quarter-to-quarter. We've also given you the kind of behavior the company exhibits on the revenue side with around 19% in the first quarter, 21% in the second quarter. Third quarter is around 24% and the remainder is in the last quarter. This has been the historical trend.

Management clarifies that revenue recognition is historically skewed towards Q4, advising against quarter-to-quarter comparisons and managing expectations for H2 growth.

Asked by Raj Shah

Impact of ERP implementation on revenue and profitability Direct
What I can tell you is that normally, we need about 700 castings per day from our cast iron foundry where we have implemented it. And we had dipped to about 200, 300 castings per day. That would have had an impact of about Rs.50 crores in revenue.

Quantifies the direct financial impact of operational challenges related to ERP implementation on revenue.

Asked by Raj Shah

Double-digit growth aspiration for FY26 Direct
I have said that we will always try to go for double-digit growth. But as you may be aware, we place priority on cash flow, profitability and revenues in that order.

Reaffirms the company's growth ambition but clarifies the strategic prioritization of cash flow and profitability over short-term revenue targets.

Asked by Raj Shah

Decline in other expenses in standalone entity Direct
I think the decline in the other expenses is because we could able to recover our old outstanding, which was lying with our customer. So this quarter, we got a success and we could recover a material amount from our old outstanding from our customers. So whatever the provision that was there in the other expenses got reversed.

Explains a specific positive movement in the financial statement, indicating successful recovery of old receivables.

Asked by Rabindra Nayak

Quantification of Jal Jeevan Mission (JJM) payment issue impact on revenue Direct
Because of JJM, we believe that the revenues have reduced by Rs.50 crores to Rs.100 crores.

Provides a specific financial estimate of the impact of government funding delays on the company's domestic revenue.

Asked by Rabindra Nayak

Margin contraction in international business, specifically UK operations Direct
I think majority of the margin contraction, as you can see in the papers, has come from the U.K. business. And that's mainly, as I had mentioned even in the previous analyst meeting, the U.K. prices are GBP 283 a megawatt hour. And so major industries, which are power intensive... have said they have suspended their production in the U.K.

Details the specific reasons for margin pressure in the international segment, linking it to external market conditions in the UK.

Asked by Rabindra Nayak

Data center opportunity in India and global strategy Direct
Yes. I mean the data center opportunity is also coming up in India. As you know that on the contractor side, there's AdaniConneX and there's obviously many announcements coming up in Andhra Pradesh about Google and other entities setting up data centers. We work closely with the big consultants, people like AECOM and Sudlows and others.

Highlights a new and growing market segment the company is targeting, leveraging existing global relationships and expertise.

Asked by Shrikant

Nuclear opportunities in India Direct
We are quite bullish about that opportunity... we have been on the primary side for the fast breeder reactor. And we also have developed the primary heat transfer pump for the fleet order requirements... we will be participating in the primary heat transfer pump for the fleet order.

Outlines a significant long-term growth area for the company, detailing its historical involvement and current strategic investments in specialized pump development for nuclear power.

Asked by Shrikant

2 min read 6 chapters

Detailed narrative

Q3 FY26 Performance Overview

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.

Domestic Business Challenges and Resilience

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 Business Growth and UK Softness

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.

Order Book and Execution Dynamics

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.

New Growth Avenues: Data Centers and Nuclear Power

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.

Strategic Focus and Priorities

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.

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