Kirl.Pneumatic

Kirloskar Pneumatic reported Q1 FY26 sales of ₹272 crores, which was flat compared to the previous year and below management's expectations, marking a slow start to the financial year. Despite this, total income saw a slight increase to ₹282.2 crores from ₹279.7 crores in Q1 FY25, driven by an 84.7% rise in other income to ₹8.2 crores. The company maintained healthy profitability with an EBITDA of ₹44.1 crores (15.6% of total income) and PAT of ₹28.1 crores (10% of total income), showing marginal YoY growth. Management expressed confidence in a recovery, targeting Q2 sales of approximately ₹500 crores and an 18%+ growth for the full FY26, aiming for nearly ₹2,000 crores in revenue.

New order booking for Q1 FY26 was approximately ₹365 crores, contributing to a total order book of ₹1,725 crores as of July 1, 2025, representing a 6.15% increase from the beginning of the year. However, order finalization, inspection, and dispatch were significantly impacted by global challenges^🌐 such as tariffs, wars, and changing political policies, as well as site availability issues. These factors led to a slower execution pace in Q1, with several major orders being deferred. Management anticipates a gradual catch-up in planned numbers, with significant improvement expected in Q2 and Q3.

The company is actively pursuing new product development and market expansion. The Tezcatlipoca centrifugal compressors are showing strong traction, with management expecting to book ₹100 crore orders this year across cold chains, ice plants, and industrial refrigeration. The newly launched Tyche semi-hermetic compressor, manufactured entirely in-house, targets a large import-dominated commercial refrigeration market estimated at ₹300-500 crores for pure compressors. Additionally, the Janus range of specialty motors has been commissioned for use in Tyche compressors and other specialty applications, supporting in-house manufacturing capabilities.

Kirloskar Pneumatic faced structural supply chain issues originating from Europe, which affected the availability of critical compressor parts, particularly Howden compressors, impacting large refrigeration packages. This challenge is not unique to the company but is an industry-wide issue stemming from the re-orientation of European supply chains. To mitigate this, the company is leveraging its own patented Khione compressors for smaller packages and aims to reduce its dependence on imported components, with internal manufacturing scale-up expected in Q3 and Q4.

The Compression segment remains the dominant revenue contributor, accounting for over 89% of total revenue, and maintained a strong profitability of 19.1% in Q1 FY26. While sales of standard screw compressors were muted, orders for Tezcatlipoca and CO2 compressors for cement plants kept the reciprocating compressor business stable. The process gas compression segment experienced a slow Q1 due to global churn and political uncertainty but is expected to benefit from the global shift towards natural gas. The company aims to increase the share of equipment/non-project orders to 80% over the next 1-2 years, up from the current 65-70%.

Kirloskar Pneumatic continues to operate as a debt-free company, with no term loans or working capital loans. The company achieved a significant improvement in capital efficiency, with net working capital falling below 12% of sales for the first time. It also released over ₹100 crores in cash flow during Q1. The planned CAPEX of ₹100 crores for FY26 is on track, primarily focused on capability building initiatives such as the lost foam casting plant at Nashik and the Janus motor plant at Saswad, aimed at enhancing in-house manufacturing and cost competitiveness.