 "Kirloskar")
Shares of Kirloskar Oil Engines (KOEL) hit a record high of Rs 490.30, as they rallied 11 per cent on the BSE in Friday’s intra-day trade after the company reported a strong 60 per cent growth in its standalone net profit at Rs 103 crore in June quarter (Q1FY24). The company had posted a net profit of Rs 65 crore in a year ago quarter.
KOEL is leader in the manufacturing of engines, agricultural equipment, and generator sets with a sizable presence in international markets. The company’s revenue grew 23.3 per cent year-on-year (YoY) at Rs 1,265 crore as against Rs 953 crore in Q1FY23. Earnings before interest, taxes, depreciation, and amortization (EBITDA) margin improved to 12.1 per cent from 10.8 per cent in a year ago quarter.
Looking ahead, the management is confident about the future prospects of KOEL. The company expects to capitalise on the growth opportunities in key sectors, including exports, infrastructure, and data centres.
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The company produces and sells internal combustion engines, generator sets, industrial solutions, pump sets, farm equipment and other allied products for various applications across business segments. The company also offers various power solutions, which include designing, engineering and commissioning.
KOEL operates in three primary business verticals, B2B, which includes businesses related to fuel agnostic internal combustion engine platforms. The businesses include power generation, industrial, distribution & aftermarket and international business; B2C, which encompasses water management solutions and agri-related businesses; and financial services segment (Arka Fincap under separate entity).
The market for generator sets has demonstrated a remarkable expansion due to the sustained demand from the manufacturing, realty and infrastructure sectors, including roll out of 5G telecom spectrum, growth in data centres, expansion of healthcare space and other planned power interruptions in different states throughout the year. The value expansion in the generator set industry is projected to remain bullish, indicating strong growth opportunities, KOEL said in FY23 annual report.
The company is cautiously optimistic about future outlook, with the government providing enhanced impetus to the infrastructure and defence sectors and the domestic market’s potential expansion. Domestic demand is anticipated to be high considering the current electricity deficit caused by geopolitical and climate conditions.
On the macro level, the company continues to benefit from strong tailwinds. The government emphasis on infrastructure development and the evolving emission norms present significant opportunities. Moreover, the adoption of the China +1 strategy by many Original Equipment Manufacturers (OEMs) presents a significant export opportunity for the company to capitalize on.
Overall, the company believes that by capitalizing on the favorable macroeconomic conditions, leveraging its core competencies and staying committed to its growth pillars, it is well-positioned for a promising outlook in the coming year.
