Kirloskar Brothers Limited — Q4 FY25 earnings call

Call held 15 May 2025

Management summary

Kirloskar Brothers delivered a robust performance in FY25, marked by 12% revenue growth and an 18% rise in EBITDA, driven by strong momentum in both domestic and international markets. The company maintains a healthy order book of over ₹3,000 crores, providing good visibility. While Q4 saw moderated revenue growth and a slight dip in EBITDA due to customer liquidity issues and material delays, management remains optimistic, focusing on operational efficiencies, new product launches, and expanding its high-margin services business, particularly in overseas markets. Working capital management was a key highlight, with a significant reduction in receivable days.

Highlights

  • Consolidated Revenue for FY25 reached ₹4,492 crores, a 12% YoY increase.

  • Consolidated EBITDA for FY25 grew 18% YoY to ₹681 crores, with the margin expanding to 15.2%.

  • Consolidated PAT for the full year FY25 stood at ₹419 crores.

  • Q4 FY25 Consolidated Revenue was ₹1,281 crores, up 4.7% YoY.

  • Q4 FY25 Consolidated EBITDA was ₹215 crores with a margin of 16.8%, a slight decline from ₹228 crores YoY.

  • The total pending order book stands strong at ₹3,012 crores (Standalone: ₹1,804 crores, Overseas: ₹1,208 crores).

  • International business registered a significant 21% growth in FY25.

  • Board recommended a final dividend of ₹7 per share, an increase from the previous year.

Key financials

3 periods

Headline

  • Consolidated Receivable Days
    102 days

Q4 FY25

  • Consolidated Revenue
    ₹1,281 Cr
    YoY +4.7%
  • Consolidated EBITDA
    ₹215 Cr
    YoY -5.7%
  • Consolidated PAT
    ₹138 Cr

FY25

  • Consolidated Revenue
    ₹4,492 Cr
    YoY +12.3%
  • Consolidated EBITDA
    ₹681 Cr
    YoY +17.8%
  • Consolidated EBITDA Margin
    15.2%
  • Consolidated PAT
    ₹419 Cr

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

Share of Pending Order Book
₹3,012 Cr Total
  • Standalone Business ₹1,804 Cr 59.9%
  • International Business ₹1,208 Cr 40.1%

Guidance & targets

Dividend

  • Final Dividend per Share Dividend · FY25 · High confidence ₹7
    Lastly, I would like to inform you that the Board of Directors has recommended a final dividend of Rs. 7 per equity share of face value Rs.2 i.e 350% of face value as against 300% in the last financial year.

    — Sanjay Kirloskar, Chairman and Managing Director

Capex

  • Annual Maintenance Capex Capex · Annual · High confidence approx. ₹100 crores
    We do maintenance CAPEX of about Rs. 100 crores, which includes debottlenecking, modernization, replacement and obviously when replacements happen, a few machines may go.

    — Sanjay Kirloskar, Chairman and Managing Director

Margin

  • Margin Improvement Margin · next 3-4 years · Low confidence Possibility of improvement
    Yes, there is a possibility. That what said that we are trying to reduce waste, improve operation, because we see a lot of scope for that.

    — Sanjay Kirloskar, Chairman and Managing Director

Market context

  • Consolidated Revenue Growth Revenue · medium term · Medium confidence double digit
    I think we always have said that we will strive for double digit growth.

    — Sanjay Kirloskar, Chairman and Managing Director

Risks & concerns

  • Customer Liquidity Issues

    medium

    Management cited customer liquidity issues and delayed payments as a reason for the Q4 slowdown, indicating a potential headwind in the market.

    Management acknowledged

  • Project Execution & Order Deferrals

    medium

    Delays in receiving free-issue material for large pumps impacted Q4. Management also confirmed some delays in order placements from clients.

    Management acknowledged

  • US Tariff Uncertainty

    low

    The impact of US tariffs is unclear due to their inconsistent application. While it could be a net positive, management cannot provide a clear outlook.

    Both downplayed

  • De-industrialization in Europe

    low

    Management noted a long-term trend of de-industrialization in Europe/UK due to net-zero policies, which could affect key customers over time.

    Management acknowledged

Areas of evasion (1)

  • Committing to a specific long-term margin target (e.g., 20%+)

Q&A highlights

2 direct
Margin Expansion Potential to 20%+ Partial
Sanjay Kirloskar: Yes, there is a possibility. That what said that we are trying to reduce waste, improve operation, because we see a lot of scope for that. Rama Kirloskar: We will try to do our best. I cannot promise any numbers.

This question tested the upper limits of profitability. Management acknowledged the potential but prudently avoided committing to a specific high number, indicating a focus on steady, operational-led improvements rather than aggressive targets.

Asked by Akash

Q4 Performance Slowdown and Customer Liquidity Direct
Sanjay Kirloskar: ...there seems to have been some liquidity issues with customers. And also towards the end, we believe in cash and carry kind of business... So we will not deliver products if we are not sure of getting the money.

This provides a clear, non-operational reason for the Q4 slowdown, highlighting management's conservative and cash-flow-focused business policy, which is a positive signal for financial prudence even if it impacts quarterly revenue recognition.

Asked by Sani Vishe

Working Capital Improvement (Receivable Days) Direct
Sanjay Kirloskar: It's on account of better collection. We believe that top line is vanity, bottom line is sanity and cash flow is reality. So we will only do sales. We only recognize sales when we collect the money as a Company.

This question highlighted a significant operational success. Management's response reinforces their strong focus on cash flow over just revenue growth, explaining the sharp drop in receivable days from 124 to 102 on a consolidated basis.

Asked by Raj Shah

2 min read 6 chapters

Detailed narrative

FY25 Financial Performance and Order Book

Kirloskar Brothers reported a strong FY25, with consolidated revenues growing 12% YoY to ₹4,492 crores and EBITDA increasing 18% to ₹681 crores. This resulted in an improved EBITDA margin of 15.2%. The performance was supported by a 12% growth in order inflows, reaching ₹5,182 crores for the year. The company ended the year with a robust pending order book of ₹3,012 crores, split between standalone operations (₹1,804 crores) and overseas business (₹1,208 crores), providing strong revenue visibility.

International Business Expansion

The international business was a key growth driver, registering a 21% increase in revenue in FY25. This growth was led by strong performance in SPP U.K., the Dutch entity, and Kirloskar Brothers Thailand. Management highlighted good traction in the U.S. market, particularly for data centers, fire, and HVAC packages. The overseas pending order book of ₹1,208 crores underscores the sustained momentum in global markets.

Domestic Market and Small Pumps Segment

On a standalone basis, the company achieved a 7% YoY revenue growth to ₹2,901 crores. Key domestic growth drivers included the Building & Construction, Industrial, and Power sectors. The Small Pump business also saw a 7% growth, bolstered by the launch of around 200 new energy-efficient products and a focus on market penetration through its distributor network. The company is also targeting rural markets with a new range of economy models.

Focus on Services and Technology

Management reiterated its strategic focus on expanding the high-margin services business. While the domestic market for long-term service contracts is still evolving, the international target is to derive 50% of revenue from services. This push is supported by internally developed proprietary software like 'Colligo' and 'Phoenix' for standardizing and scaling repair operations, along with an IoT device for remote monitoring and predictive maintenance.

Margin Outlook and Operational Efficiency

The consolidated EBITDA margin for Q4 FY25 stood at 16.8%, a slight dip from the previous year. Management attributed this to customer liquidity challenges and delays in free-issue material, which impacted execution. Looking ahead, the company sees scope for margin expansion through ongoing operational efficiency initiatives, waste reduction, and planned future rejigs of the foundry and factory at its large Kirloskarvadi plant.

Strong Working Capital Management

A significant achievement was the improvement in working capital. Consolidated receivable days were reduced from 124 to 102 days. Management emphasized a strict 'cash and carry' policy, stating, "top line is vanity, bottom line is sanity and cash flow is reality." This disciplined approach to collections strengthens the balance sheet and underpins the company's financial health.

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