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Kirloskar Pneumatic (KKPC) reported a healthy quarter registering 20.7% YoY revenue growth while maintaining an 18.5% EBITDA margin. During the year, KKPC gained market share in its Air compression segment aided by stronger adoption and demand for Tezcatlipoca compressors while the Refrigeration compression segment remained a growth driver with traction from dairy, food processing, pharma, chemicals etc. Meanwhile, the demand for the Gas compression segment was subdued owing to higher gas prices and limited gas availability to CGD companies. Going forward, management aims to achieve revenue of ~Rs20bn with margins between 18-20% in FY26 driven by continued traction in refrigeration compression, market share gains in Air compression, scale up of key products (Tezcatlipoca, Khione) and new product launches (Tai Chi).

We believe KKPC is well placed for healthy long-term growth driven by 1) products launches in air compression (Tezcatlipoca, ARiA) to capture centrifugal and low-end screw compressor markets that are importdominated, 2) market leadership in up/mid/downstream oil & gas and CNG mother stations, where the investment pipelines are robust, 3) new products – Calana and Jarilo – to address opportunities in CNG daughter stations and CBG plants respectively, 4) launch of Khione and acquisition of S&C India to enhance penetration in commercial and industrial refrigeration, 5) focus on building in house IP and backward integration capabilities, and 6) strong cash flows and balance sheet. The stock is trading at a PE of 31.7x/26.3x on FY25/26/27E earnings. We roll forward to Mar’27 and maintain ‘Buy’ rating with a TP of Rs1,636 (Rs1,564 earlier) valuing the business at a PE of 35x Mar’27E (37x Sep’26E earlier).

Healthy top line growth amid marginal miss on profitability: Revenue rose 20.7% YoY to Rs5.9bn (Ple: Rs5.1bn) with Compression Systems sales jumping 20.3% YoY to Rs5.6bn. EBITDA came in at Rs1.1bn vs Rs916mn in Q4FY24 (Ple: Rs1.0bn). EBITDA margin remained flat at 18.5% YoY (Ple: 20.2%). Compression Systems EBIT margin stood at 21.3% (vs 21.2% in Q4FY24). Adj. PBT rose by 29.0% YoY to Rs1.1bn (Ple: Rs957mn). Adj. PAT increased by 24.7% YoY to Rs830mn (Ple: Rs714mn) driven by lower depreciation expenses (-15.9% YoY to Rs71mn) and lower effective tax rate (23.1% vs 25.4% in Q4FY24).

Healthy order book of Rs16.2bn provides strong visibility: Q4FY25 order intake stood at ~Rs3.6bn (down 30.8% YoY) while the full year FY25 order intake was Rs18.6bn (up ~23% YoY). Order book stood at Rs16.2bn (1.0x of TTM revenue) up ~12% YoY.

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