Buy Kirloskar Oil Engines; target of Rs 1500: Motilal Oswal

Motilal Oswal is bullish on Kirloskar Oil Engines recommended buy rating on the stock with a target price of Rs 1500 in its research report dated November 13, 2024.

Broker Research

November 15, 2024 / 17:54 IST

Buy

26 Aug, 2025 12:21

Volume

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Motilal Oswal's research report on Kirloskar Oil Engines

KOEL’s 2QFY25 results beat our estimates, with 13%/67%/90% YoY growth in revenue/EBITDA/PAT. B2B segment growth was aided by powergen, industrial and distribution segments, while exports remained weak due to weakness in select markets. B2C segment growth was impacted by a planned plant transition. Powergen segment revenues declined QoQ on relatively lesser price hikes for lower-kVa nodes for KOEL vs. its competitor and a QoQ decline in market volumes due to norm shift. Going ahead, as genset market matures, we expect KOEL to gain in overall volumes in line with demand improvement. To bake in lower-than-expected exports and distribution segment growth, we cut our FY25/FY26/FY27 EPS estimates by 3%/3%/4%.

Outlook

We continue to value KOEL at 29x P/E on two-year forward estimates and revise our SOTPbased TP to INR1,500 (from INR1,540). Adjusted with subsidiary valuation, KOEL is trading at 28x FY25E/22x FY26E/17.5x FY27E EPS, which is still at a 45-50% discount to the market leader.

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