Kirloskar Brothers Limited: Navigating Headwinds with Global Strength and Strategic Innovation

Kirloskar Brothers Limited, a venerable name in Indian engineering, recently unveiled its financial performance for Q2 and H1 FY26, showcasing a resilient operational strategy amidst a challenging domestic landscape. For the quarter ended September 30, 2025, the company reported a consolidated revenue of Rs. 1,028 crore, maintaining broad stability year-on-year. The first half of the fiscal year saw consolidated revenue at Rs. 2,007 crore, reflecting a modest 3% decline compared to the previous year. This moderation was primarily attributed to seasonal headwinds, including an extended monsoon, and delays in state-level funding for key projects like the Jal Jeevan Mission.

Despite these domestic pressures, Kirloskar Brothers demonstrated robust underlying business fundamentals. The company's diversified business model and disciplined execution were instrumental in maintaining stability. Demand across both small pumps and industrial segments remained strong, underscoring the inherent strength of its portfolio. Consolidated EBITDA for Q2 FY26 stood at Rs. 124 crore with a 12% margin, while H1 FY26 EBITDA was Rs. 251 crore. The year-on-year moderation in profitability was influenced by changes in product mix and forex revaluation impacts. However, the company's strict commercial policies ensured zero exposure on receivables for projects affected by funding delays, safeguarding its financial health.

Financial Snapshot: Q2 & H1 FY26 Consolidated Performance

Global Footprint and Strategic Initiatives Drive Growth

Kirloskar Brothers' international operations delivered an impressive performance, with the US market growing by 21%, Thailand by 158%, and South Africa by 27% in constant currency. This growth was fueled by the execution of previously deferred orders and a general improvement in product demand. The international order book also saw a significant expansion of 25% year-on-year, reaching Rs. 1,289 crore, providing strong visibility for the second half of the fiscal year. The company's standalone order book, excluding the small pumps business, grew by 13% over the previous year to Rs. 2,127 crore, reflecting a healthy pipeline and sustained customer confidence.

The management highlighted several strategic initiatives aimed at future growth and profitability. The company is making significant inroads into high-growth sectors such as data centers, where it supplies comprehensive fire and cooling systems. Kirloskar Brothers has successfully executed 25-30 data center projects to date and is focusing on modular containerized systems to meet quick lead times. Furthermore, the company is becoming an indigenous player in the critical PetroTurbo pump market, having secured its first large order with an estimated annual market requirement of 25,000-30,000 pumps.

Digital transformation remains a core focus, with investments in 3D printing for faster manufacturing, AR/VR for training, AI-ML for predictive analytics, and IoT-enabled solutions like KirloSmart™ 2.0 and 2.1 for remote monitoring. These initiatives are designed to enhance efficiency, reduce costs, and create new revenue streams, including a proprietary subscription platform for remote failure prediction and maintenance.

Operational Excellence and Future Outlook

Kirloskar Brothers is actively debottlenecking capacities and optimizing costs across its domestic subsidiaries. At Karad Projects and Motors Limited (KPML), steps have been taken to improve machining lines and processes to align output with the small pump business, leading to faster production and reduced costs. The Kolhapur Steel Limited (TKSL) has seen increased sales and reduced losses, benefiting from a renewed focus on the power sector. Additionally, the implementation of Group Captive Solar at TKSL's foundry aims to significantly reduce energy costs.

The company is also strategically reducing its exposure to low-margin, working capital-intensive EPC (Engineering, Procurement, and Construction) orders, which have decreased from 10% of revenue in FY20 to 3% in FY25. This shift is expected to lead to higher margins, improved profitability, and a more efficient working capital cycle. The management emphasized its commitment to value-added products and services, leveraging its R&D centers and a strong track record of product innovation, with eight new products having earned the India Design Mark in the last five years.

Looking ahead, Kirloskar Brothers remains optimistic about its growth trajectory, driven by a healthy balance between domestic and international markets, a robust order pipeline, and a continued focus on operational excellence. The company anticipates stronger performance in the second half of the fiscal year, aligning with historical seasonality. With its strategic clarity, sustained focus on innovation, and disciplined execution, Kirloskar Brothers Limited is well-positioned to deliver sustainable and profitable growth, reinforcing investor trust in its long-term vision.