Prabhudas Lilladher's research report on Kirloskar Pneumatic Company
We interacted with the management of Kirloskar Pneumatic Company (KKPC), who reiterated a strong demand outlook for Air and Refrigeration compressors despite subdued order bookings amid finalization delays which is expected to show strong rebound in H2FY26. In the Air compression segment, Tezcatlipoca centrifugal compressors are witnessing strong traction and gaining market share. Refrigeration compressors continue to see robust demand from industrial and commercial end-users, with revenue contribution expected to rise to ~45% (vs ~35% earlier). The Gas compression segment remains subdued, although demand for gas booster packages continues to be healthy. KKPC’s continued new product launches, such as Tyche, are expected to drive the next leg of growth while new initiatives such as RenovAir replacement scheme is expected to pave way for market share gains. Looking ahead, management targets ~20% CAGR in revenues with EBITDA margins scaling up to ~20%, supported by market share gains, new product launches and eventual foray into export markets.
Outlook
The stock is currently trading at a PE of 32.5x/26.9x on FY26/27E. We reiterate our ‘Buy’ rating valuing the stock at a PE of 35x on FY27E (same as earlier), arriving at a TP of Rs1,636 (same as earlier).
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