Kirloskar Pneumatic Company Limited — Q4 FY26 earnings call

Call held 27 Apr 2026

Management summary

Kirloskar Pneumatic delivered a robust Q4 and full-year FY26 performance, achieving record highs in order booking, total income, and PBT, supported by new product innovations and improved margins. The company's strategic shift towards shorter-cycle equipment business and backward integration contributed to profitability. While geopolitical tensions in the Middle East pose near-term export challenges, management remains confident in achieving over 20% growth, focusing on new product commercialization and market diversification.

Highlights

  • Highest order booking of more than INR 2,000 crores in FY26, demonstrating strong demand.

  • Achieved highest total income of INR 1,786 crores and highest PBT of INR 356 crores for FY26.

  • EBITDA margin expanded to 21.7% in FY26 from 19% in FY25, driven by in-house capabilities and product mix.

  • Successfully developed and launched new products like Zephyros air conditioning package, Hydrino oil-free air compressor, and Tyche semi-hermetic compressors.

  • Declared the highest dividend of INR 12 per share, representing 600% on face value of INR 2.

Concerns

  • Management cautioned that the sustainable EBITDA margin expectation for FY27 is 18-20%, lower than FY26's 21.7% (or Q4's 24.9% for Compression segment).

  • Geopolitical situation in the Middle East is causing near-term pressure on export orders, leading to slow movement and dispatch difficulties.

  • Screw compressors were identified as a laggard segment in the last financial year.

Key financials

  1. Sales Q4 FY26 ₹706 Cr +21.1%YoY
  2. Sales Q4 FY25 ₹583 Cr
  3. Total Income FY26 ₹1,786 Cr
  4. PBT FY26 ₹356 Cr +25.4%YoY
  5. EBITDA Margin FY26 21.7%
  6. PAT FY26 ₹258 Cr +22.3%YoY
  7. EPS FY26 ₹39.8 +22.4%YoY
  8. Net Cash Position ₹460 Cr

What they filed

Q1 FY27: revenue up 10.3%, net profit up 21.4% against the same quarter last year.

₹ Cr · quarterly
Line itemQ2 FY25Q3 FY25Q4 FY25Q1 FY26Q2 FY26Q3 FY26Q4 FY26Q1 FY27
Revenue431 340 583 272 378 −12%404 +19%706 +21%300 +10%
EBITDA94 48 110 36 58 −38%81 +69%186 +69%46 +28%
Net profit68 36 81 28 43 −37%43 +19%144 +78%34 +21%
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

  • Compression Segment
    93.4% Share of Total Income24.9% Operating Profit FY2621.7% Operating Profit FY25
  • Air Compressor Division (ACD)
    18% Share of Business
  • Refrigeration
    40% Share of Business
  • Process Gas Systems (PGS)
    35% Share of Business
  • Precision Engineering
    — Reporting Status FY26

Order book

high confidence

Total value

₹1,863 Cr

as of 2026-04-01 quantified

14.7% YoY

Execution

Roughly INR 500 crores executable beyond FY27, remaining INR 1,363 crores executable in FY27. Equipment business execution cycle 4 weeks to 12 weeks.

Composition

  • Precision Components business (other)

Cancellations & deferrals

  • deferred: Delayed package orders and late finalization of large contracts in the past year.
  • deferred: Difficult to dispatch packages for orders in the Middle East due to geopolitical situation.
The company is shifting towards the Equipment business with shorter execution cycles and is seeing renewed interest in alternative fuels and domestic upstream gas projects.

Source: Prepared remarks

Capital allocation

high confidence
  • Capex ₹320 Cr
    • PLI scheme commitment and new product development (Zephyros, motor, heat exchanger, sheet metal components) ₹320 Cr
    The INR320 crores is a commitment for the PLI scheme, what we did. And we developed the product. One is Zephyros, that is air conditioning package. And the second is the motor. Again, it is developed. ... And out of the INR320 crores, roughly INR60 crores we already incurred for this and remaining, we are targeting to incur in another 2 years' time.
  • Debt Debt disclosed
    Company has maintained the status as a debt-free company, and I would like to state that company has still net cash position of cash and cash equivalent of about INR460 crores as on 1st April 2026.
  • Dividend ₹8.5/share (final)
    the Board of Directors has approved a final dividend at the rate of 425% on the face value of INR2 per share, that is INR8.50 per share. This is in addition to payment of interim dividend, which is already paid at the rate of 175%, that is INR3.50. So the total dividend for FY26 is 600%, which is highest in the history of the company.
  • Liquidity Cash ₹460 Cr Company maintains a net cash position.
    Company has maintained the status as a debt-free company, and I would like to state that company has still net cash position of cash and cash equivalent of about INR460 crores as on 1st April 2026.

Guidance & targets

Margin

  • EBITDA Margin Margin · FY27 · High confidence 18-20%
    While this quarter and year has been good on the margin front, we would like to caution that this year would be a bit of an exception, a margin expectation of 18% to 20% EBITDA would be more sustainable.

    — Aman Kirloskar

Revenue

  • Overall Growth Revenue · FY27 · High confidence 20% plus
    With our strong order board and a substantial volume of active proposals entering the new financial year, we are confident in achieving our growth objective of 20% plus.

    — Aman Kirloskar

Sales

  • New Products Sales Contribution Sales · Ongoing · Medium confidence 10-15%
    And so I think generally, from new products, we target that we should have at least 10% to 15% of sales.

    — Aman Kirloskar

Commercialization

  • Zephyros Air Conditioning Package Commercialization · Q1 FY27 · High confidence Commercialized
    Our Zephyros air conditioning package will be commercialized in the market in the first quarter of FY27, as we are still doing some fine-tuning to compact the design and reduce the costs.

    — Aman Kirloskar

Product Launch

  • A-800 Smallest Centrifugal Frame Product Launch · Within 1 month or so · Medium confidence Launched
    Coming to the A-800 frame, I think we still need maybe 1 month or so to really get the product launched.

    — Aman Kirloskar

Segment Reporting

  • Precision Engineering Segment Segment Reporting · Q1 FY27 onwards · High confidence Reportable
    Regarding the export, we are not fully dependent on the MENA region. We are focused on the Southeast Asia. We focus on the African region and MENA region, a little bit less because right now, the situation is different. So otherwise, we focus on different and new niche area for the export. For that, you have to wait up to Q1. We'll definitely disclose as and when we achieve. But definitely, there is a good progress on that part. And definitely, it will come under the reportable segment from Q1 onwards.

    — Ramesh Birajdar

What to watch in Q1 FY27

Zephyros Commercialization and Sales

Q1 FY27
Current Still fine-tuning design; units installed in office running well
Target Commercialized and initial orders booked

Why it matters

Successful commercialization of Zephyros marks entry into a new business segment (air conditioning) and validates PLI scheme investments.

Our Zephyros air conditioning package will be commercialized in the market in the first quarter of FY27, as we are still doing some fine-tuning to compact the design and reduce the costs.

Risks & concerns

  • Geopolitical situation in Middle East

    high

    Near-term pressure on export orders, making it difficult to dispatch existing packages and book new orders, though long-term demand for gas packages is expected.

    Management acknowledged

  • Margin sustainability for FY27

    medium

    Management cautioned that the 21.7% EBITDA margin in FY26 was an exception, with a more sustainable expectation of 18-20% for FY27.

    Management acknowledged

  • Competition in new product segments (Zephyros)

    medium

    The Zephyros segment is highly competitive, which may lead to lower margins, requiring a focus on higher volumes to compensate.

    Management acknowledged

  • Sustainability of Precision Engineering order inflow

    medium

    Management is uncertain if the current high order inflow of INR 500 crores for Precision Engineering is sustainable or a one-off, requiring further observation.

    Management not addressed

Q&A highlights

6 direct, 1 evasive
Order Book Composition and Execution Cycle Direct
This INR1,863 crores order book as on 1st April is inclusive of Precision Components business. And out of this, roughly INR500 crores is executable beyond FY27 and remaining it is executable in this year. And continuously focusing on the Equipment business, where it is a touch and go, where roughly the INR600 crores to INR700 crores business, we get it during the year, we execute and we dispatch from the sales.

Clarified the breakdown of the order book, including the new Precision Engineering segment, and highlighted the strategic shift towards shorter-cycle equipment business.

Asked by Priyank Chheda

Zephyros GTM Strategy and New Product Sales Direct
So just to reiterate, Zephyros, is a fairly innovative air conditioning package, which uses a green refrigerant and is significantly more efficient than, let's say, traditional chiller systems. Our go-to-market strategy here would really be engaging with all the stakeholders, whether that is consultants, architects, installers. And probably before that, in this financial year, we do have a target for how much we wish to sell. ... On the Tezcatlipoca, we have about 130 machines in the field, of which 85 have been commissioned.

Provided insights into the commercialization strategy for the new Zephyros product and quantified the installed base for Tezcatlipoca compressors.

Asked by Priyank Chheda

ROCE and Payback for Zephyros Capex Partial
In this segment, considering that it is a highly competitive segment, we probably will not be targeting those kind of margins. However, we will try and target very high volumes. These are volumes which KPCL generally has not done. So on the margin side, it may not be as high, but on the volume side, it should make up for it.

Addressed concerns about the profitability of the INR 320 crores capex for Zephyros, indicating a strategy of lower margins but higher volumes in a competitive market.

Asked by Balasubramanian

Middle East Export Strategy and Geopolitical Impact Direct
So with regards to the geopolitical situation in the Middle East, there is a near-term pressure. As I had mentioned previously, it is difficult to dispatch packages for orders we already have over there. And it is also difficult to book new orders. However, long term, this will order well for us on 2 fronts. One is on the international side, as you rightly pointed out, there will be a demand for let's say, gas packages going into some of these countries.

Acknowledged the current challenges in the Middle East but provided a long-term positive outlook for gas package demand in the region.

Asked by Sameer Thakur

Oil-Free Compressor (Hydrino) Opportunity Direct
Yes, yes, so the compressor, which we are referring to is branded as Hydrino. It is a water-injected screw compressor, largely used in applications in food processing and pharmaceuticals. In terms of -- is there, let's say, a similar category in the market? Yes, there is. We do have some competition who have similar products. However, we have several unique USPs in this product. So one is that we have no oil in this machine at all. Our competitors may have oil in their bearings, etc. And we are also domestically produced, which means that not only are we generally more cost competitive, but we are also able to offer service and spares to customers much faster than imported machines.

Detailed the competitive advantages and target applications for the newly launched Hydrino oil-free compressor, highlighting its domestic production and unique features.

Asked by Amit Anwani

Sustainability of Precision Engineering Orders Evasive
Yes. So the reason which we are the reason why we are being quite opaque on this is because we don't really know whether it is sustainable. So I think for that, we'll have to really go forward and see. But certainly, in terms of Precision Engineering, we have many unique capabilities with us, whether that is in forgings, castings, machinings, etc. So there will be a stable demand, but I cannot really foresee whether it will be to the same extent.

Management expressed uncertainty about the long-term sustainability of the high order inflow in the Precision Engineering division, indicating it's a wait-and-watch situation.

Asked by Amit Anwani

EBITDA Margin Sustainability Direct
Yes. So as we have been saying, directionally, we want to be 18% to 20% on an EBITDA level. ... This quarter also we crossed almost 23% and still we are saying it is 18% to 20% is sustainable for core business, that is Compression business.

Reiterated the sustainable EBITDA margin target of 18-20% for the core business, clarifying that the higher Q4 margin was an exception.

Asked by Divyam Jain

Execution Cycle for New Orders Direct
Equipment period is between four weeks to something 12 weeks. And roughly the last packages ranging from six, seven months, eight months. But as we are growing, we are being developed the many products like Tezcatlipoca, Khione, Tyche. They are having very short execution cycles. They are not very great eight months, 12 months period. If not the case, we are not focusing on the large package business.

Provided clarity on the significantly shorter execution cycles (4-12 weeks) for the new equipment-focused products compared to older, larger packages, supporting the strategy for faster revenue recognition.

Asked by Sahil Sanghvi

3 min read 7 chapters

Detailed narrative

Strong FY26 Performance and Record Achievements

Kirloskar Pneumatic reported its strongest financial year to date, achieving the highest order booking of over INR 2,000 crores. The company recorded its highest total income of INR 1,786 crores and highest PBT of INR 356 crores for FY26. The EBITDA margin improved significantly to 21.7% in FY26 from 19% in FY25, with the Compression segment showing an operating profit of 24.9%. This robust performance was attributed to in-house capabilities, strategic market approaches, and cost-saving efforts.

New Product Development and Market Entry

The company made significant strides in innovation, filing 57 new IPs in FY26, bringing the total to over 128. Several new products were developed and launched, including the Zephyros air conditioning package, Hydrino oil-free air compressor, and Tyche semi-hermetic compressors. Zephyros, utilizing a green refrigerant, is set for commercialization in Q1 FY27, targeting smaller machine shops and banquet halls. The Hydrino oil-free compressor, domestically produced for food and pharmaceutical applications, has already secured initial orders.

Order Book Growth and Execution Strategy

As of April 1, 2026, the unexecuted order book stood at INR 1,863 crores, marking a 15% increase from INR 1,624 crores a year prior. Of this, INR 1,363 crores is expected to be executed in FY27, with INR 500 crores extending beyond. The company is strategically shifting its focus towards the Equipment business, which features shorter execution cycles of 4 to 12 weeks, aiming to reduce lumpiness and improve predictability compared to larger, longer-cycle packages.

Capital Expenditure and Backward Integration

Kirloskar Pneumatic has committed INR 320 crores under the PLI scheme for new product development and backward integration initiatives. Approximately INR 60 crores has already been incurred, with the remaining investment planned over the next two years. This capex supports the in-house manufacturing of critical components like motors, heat exchangers, and sheet metal for new products such as Zephyros, enhancing cost efficiency and control over the supply chain.

Segmental Performance and Outlook

The Refrigeration division contributed 40-45% of the total business, achieving record high volumes for its KC/KCX compressor range. The Air Compressor division (18-20% of business) saw strong market share gains for Tezcatlipoca centrifugal compressors and record highs for gas reciprocating compressors, though screw compressors were a laggard. The Process Gas Systems division (35-40% of business) performed well, expanding its O&M business to manage over 1,000 CNG stations across India, with a positive outlook driven by domestic exploration and alternative fuels.

Geopolitical Impact and Market Diversification

The geopolitical situation in the Middle East has created near-term pressure on export orders, making dispatch and new bookings challenging. In response, the company has diversified its focus to regions like Southeast Asia and North Africa. Management believes that while there are current difficulties, the long-term implications of geopolitical unrest could increase demand for gas packages. The company is also well-positioned to capitalize on opportunities in alternative fuels such as biogas and hydrogen.

Shareholder Returns and Financial Health

The company maintained its debt-free status, reporting a net cash position of INR 460 crores as of April 1, 2026. For FY26, Kirloskar Pneumatic declared its highest-ever dividend of INR 12 per share, representing 600% on a face value of INR 2. This includes an interim dividend of INR 3.50 and a final dividend of INR 8.50 per share. The Earnings Per Share (EPS) for FY26 grew by 22% to INR 39.80, reflecting strong profitability.

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