Shares of Kirloskar Oil Engine are higher by nearly 2.5 percent after Motilal Oswal said on March 17 the stock is close to bottoming out, reiterating its ‘Buy’ rating with a revised target of Rs 1,150 per share.
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Motilal Oswal's note is optimistic about Kirloskar Oil Engines (KOEL), highlighting improving demand trends and stabilising operations after a challenging quarter. The note said that KOEL’s performance was previously hit by weak demand in the powergen segment, selective kVA focus, and shifting of its B2C division facility. However, sequential recovery in powergen and operational stabilisation in B2C business suggest the worst may be behind the company.
Even though near-term volatility in the powergen segment persists due to a high base and rising competition, Motilal Oswal expects KOEL to benefit from a shift towards mid-to-high kVA powergen segments, expansion into new industrial areas, a stronger distribution network, and improved profitability in its B2C division.
These initiatives are expected to yield results over the coming years, said Motilal Oswal.
The brokerage has trimmed its FY 2026/27 earnings estimates by 4 to 6 percent to account for slightly lower margins, but continues to value KOEL at 25x FY27e earnings, and believes current valuation reflects excessive pessimism over growth and margins, which is unwarranted.
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